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POLICY INSIGHT
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Double Trouble in Florida

September 28, 2012 at 2:26 PM

As we note in recent analyses, Florida’s November ballot will contain two measures, Amendment 3 and Amendment 4, each of which would severely squeeze funding for local services like schools, roads, and fire and police protection.  Their combined impact would be even more dramatic.

  • Amendment 3 would limit annual state revenue growth under a formula that can’t keep pace with the normal costs of maintaining existing public services over time.  In Colorado, the only state that tried such a formula, it led to drastic cuts in services.

    Amendment 3 would inevitably drive down state funding for education.  This would create serious problems for local school districts, which get over half of their funding from the state.

    Florida’s police and fire departments and other local services also depend on state support.  By forcing steep cuts in state revenues, Amendment 3 would almost certainly erode this support, damaging local budgets and causing significant local service cuts, tax increases, or, most likely, both.

  • Amendment 4 would lock a series of misguided property tax changes into the state’s constitution, reducing the taxable value of certain types of property.

    Since property taxes are the main funding source for local services like fire and police protection, the only way that localities could preserve these services would be to raise property tax rates.  Basically, localities would have to raise taxes on those who benefit least from the amendment (primarily established, year-round Florida homeowners) to pay for tax cuts for those who benefit most from the amendment (primarily large corporations and other businesses and owners of properties that are not primary residences, like vacation homes).

    To the extent that local governments didn’t offset the revenue losses from Amendment 4 by raising property tax rates, the measure would take a large and growing bite out of funding for local services.  At current rates, the local revenue loss each year would grow to $471 million by 2016 — the equivalent of 7,656 police officers at the state’s projected average annual police salary that year.

If both measures win approval, the impact on localities would be especially severe:  Amendment 4 would cut local revenues directly, and Amendment 3 would cut them indirectly by reducing state aid.  But either measure would, in all likelihood, lead to some combination of increases in local taxes and cuts to local services.