The Downward Tren d in Tax Revenue

December 14, 2009

st1:*{behavior:url(#ieooui) }

Florida legislators say the downward trend in tax revenue will force significant changes to education funding.

While relief flooded the Florida State legislature brought on by the Federal stimulus funds in 2009, legislators soon realized that this was but a "band-aid" on a much deeper wound.

Overall, trends in school funding sources are on the decline in Florida.  The stimulus funds, while helpful in the short-term, will expire in 2012.  Economists new predict that the economic recovery, originally anticipated for early 2010,is now, at best slated to arrive in late 2010 or early 2011.

Throughout the economic downturn of the past few years, many legislators were unclear on the depth or length of the current economic downturn. Unfortunately, the Federal stimulus dollars allowed for the postponement of the tough decisions that lie ahead. It is now quite clear that legislators in Florida and throughout the country, will have to address the controversial and painful issues of Sales Tax exemptions and, however unpopular, the prospect of raising taxes and fees.  In the meantime, nobody has a precise read on how deep the trough of lowered revenue will get – especially in Florida – where dampened appetite for tourism and slowed export growth have a significant negative effect.

On top of the problems faced in many states, Florida’s unusually high unemployment rate,which is seventh highest in the nation,  and the continued depreciation of home values will all exert pressure on consumer and discretionary spending. These factors will influence revenue collections in the following ways:

• Sales Tax…In addition to the decline in home prices, worsening job losses and the drop

in asset values are undermining consumer and business confidence and reducing

discretionary spending. Purchases in the tourism and auto sectors fell sharply in October

and are expected to remain below previous estimates.  Florida relies heavily on sales tax collections.

• Documentary Stamp and Intangibles Taxes…Tax collections are expected to be

significantly below previous estimates. While some improvement has occurred in

existing home sales volume, current credit market conditions are expected to erode those

gains.Moreover, home prices will continue to fall, exerting downward pressure on

collections until the housing market begins to stabilize. In addition, the outlook for loans

related to automobile sales has further weakened.

& nbsp;

• Corporate Income Tax…Tax collections will continue to decline in 2010 putting further pressure on other revenue sources to meet state commitments.

While legislators would like to shield public education funding from further budget cuts, staffers have projected a cut of more than $900million in education funding in the 2010-2011 budget year and a $650 million plus cut in 2011-2012.

Cutting spending and increasing non-tax revenue will become even more important to school districts in the coming years. One such area is ensuring revenue maximization in school based Medicaid. Maximizing the potential of this program, with little or no cost to the state, is a process that should be undertaken. Again, this has little or no financial impact on the state.The bill is handled by the Federal government. The Federal government stands ready to support schools in providing necessary services to advance the education of our children. However, as there is no unified voice for school districts in the state addressing this issue, the program continues without significant representation at the state level. This representation would focuson ways to expand the program, witho ut any impact on state funds, and significantly increase the amount of revenue brought to districts through the Federal program.

Maximizing claiming dollars in Medicaid seems simple compared to what an awesome task each school district has in educating students for the 21st century.  How do we prepare children for a world that many of us cannot even envision?  Did our teachers foresee the computer and other technological advances that would change literally everything?  Probably not, but they taught us to read, write, compute, think, adapt, work hard, and maintain intellectual curiosity.

Florida’s future rests with talent development, and that means education. We have visionaries in our public school system who truly “get it.”We have business and industry leaders who know the importance of a qualified workforce and who are working with us and others to ensure its existence. We have community leaders who are committed to making tomorrow a brighter day for Florida’s families. 

In these troubled times, Florida school districts, and those throughout the country, need to partner with companies devoted to the greater goal of providing extra resources for education. Accelify is one such company. Through its sophisticated systems, exceptionally people and world-class service, Accelify helps districts pursue the goal of providing a quality, resource rich,education for each and every child.