Tax & Revenue Limits

1. Tax & Revenue Limits Robert J. Eger III

2. Using the Information Gathered • How can the Current Collins Institute Research Inform Tax & Revenue Policy? • Investigate Proposed Policy Changes Affecting Florida Local Governments • Assist in Policy Evaluation • Provide Information for Alternatives to Legislative Action

3. Focus of Today’s Presentation • Senate Joint Resolution 1906 “The creation of a new section in Article VII of the State Constitution to limit state and local government revenues and require voter approval of new taxes and fees.”

4. Constitutional Amendments • Recently - Specific to Ad Valorem Tax • Examples • Amendment 10 - Save our Homes (Implemented FY 1995) • Amendment 1 (Implemented FY 2008) • Proposed – SJR 1906 • Taxes, Fees, Assessments, Licenses, Fines, and Charges for Services

5. Setting for SJR 1906 • Florida Statute 129- Establishes Balanced Budget • Effectively Requires • Limit on Revenues ↔ Limit on Expenditures • Florida Statute 200.186 • Millage Rates • Affected by • Florida Per Capita Income Growth • Voting majorities

6. SJR 1906 - Statements • Baseline • Revenues collected in FY 2011 • Annual Adjustments • CPI for the south region AND rate of population change • Boundaries of local government • School districts use enrollment change to replace population change • Property tax revenue limit • Property tax revenue in the prior calendar year plus annual local growth • Adjusted for property tax revenue changes approved by voters • Excess revenue • Local Budget Stabilization Fund • Maximum 3% of last completed fiscal year’s revenue collection • Additional excess revenue or revenue not used for stabilization fund • Held in separate cash reserve • Considered revenue in 1st or 2nd year after collection of the excess revenue • Use of Stabilization funds • Shortfalls of general revenue fund • Emergencies • Substantial harm to population or property • Declared by governor

7. Synopsis of SJR 1906 • Three Potential Impacts • FY 2011 as revenue baseline • Annual Adjustment • Scope • All taxing governments

8. Analysis • Vary Revenue Baseline from SJR 1906 • Using FY1997 & FY 2006 • Projected FY2008 Revenues (54 of 67 counties reporting) • Annual Adjustment • South Region CPI + Population Change • Scope • All county governments • Component units • Dependent units

9. Results • FY1997 Base • Average County --100.74% of Actual FY2008 Revenue • Counties by Population • < 50,000 -- 109.62% • 50-250,000 -- 92.65% • 250-500,000 -- 97.09% • 500-1,000,000 -- 97.41% • > 1,000,000 – 100.93% • FY 2006 Base • Average County -- 112.40% of Actual FY2008 Revenue • Counties by Population • < 50,000 -- 108.73% • 50-250,000 -- 116.68% • 250-500,000 -- 114.93% • 500-1,000,000 – 104.35% • > 1,000,000 -– 118.99% Revenue Effect 92.65% to 109.62% Revenue Effect 104.35% to 118.99%

10. Potential Effects • FY2011 revenue baseline maybe artificially low • Specific price index rather than the CPI • CPI for South Region based on population • Population < 50,000 • Population 50,000 to 1.5 Million • Population > 1.5 million (only affects Broward & Miami-Dade) • Palm Beach, Hillsborough, & Orange approaching 1.5 million • Local measure • County Unemployment, County Per Capita Income, County Population Change, County In-Out Migration of Businesses? • Scope • Component Units, Dependent Districts, and/or Enterprise Funds Exempted?

11. Where Do We Go From Here? • Recommendations on SJR 1906 or other Revenue/Expenditure Limits • Baseline • Annual Adjustment • Scope • Constitutional Amendment v. Statutory? • DFS • Transparency • Timeliness