Title on Ballot: State Government Revenue Limitation
Sponsor/Originator: The Florida Legislature
What it would do:
This amendment would set a state revenue limit each year based on a formula that considers population growth and inflation instead of using the current method of calculating the revenue limit based on personal income.
If You Vote Yes:
A “yes” vote means you want the state to change the way it calculates its revenue limit.
If You Vote No:
A “no” vote means you do not want the state to change the way it calculates its revenue limit.
Click here to visit the Florida Division of Elections Background on Amendment 3 (including full text of the amendment)
Summary of Amendment (from Division of Elections site):
This proposed amendment to the State Constitution replaces the existing state revenue limitation based on Florida personal income growth with a new state revenue limitation based on inflation and population changes. Under the amendment, state revenues, as defined in the amendment, collected in excess of the revenue limitation must be deposited into the budget stabilization fund until the fund reaches its maximum balance, and thereafter shall be used for the support and maintenance of public schools by reducing the minimum financial effort required from school districts for participation in a state-funded education finance program, or, if the minimum financial effort is no longer required, returned to the taxpayers. The Legislature may increase the state revenue limitation through a bill approved by a super majority vote of each house of the Legislature. The Legislature may also submit a proposed increase in the state revenue limitation to the voters. The Legislature must implement this proposed amendment by general law. The amendment will take effect upon approval by the electors and will first apply to the 2014-2015 state fiscal year.
Arguments for:
Supporters say this amendment would ensure that the state budget never grows beyond a family’s ability to pay the taxes and fees needed to fund that growth. They say it would make government more efficient.
Arguments against:
Critics say that during tough economic times, when tax revenues drop and there is a greater need for government services, this amendment would make it impossible for agencies to meet demand, even when there is available revenue. They say it threatens funding for critical government services like health care and education.
Should the state change the way it calculates its revenue limit?
Since 1995, Florida has set a cap for the amount of revenue it can spend every year from taxes and fees imposed on everything from gasoline and tobacco sales to business licenses and auto titles. Any excess revenue is to be deposited in the state’s rainy day fund or returned to taxpayers, rather than be spent by the government. The cap is considered by its backers to be a self-imposed restraint on government growth.
The current version is set using a formula based on annual changes in Florida personal income, a cumulative total of all personal earnings such as wages, dividends, rent or interest income received in a given year by Florida residents. To date, state revenue collections have never exceeded the cap (largely due to rising personal income and falling tax rates).
If passed, Amendment 3 would impose a stricter formula for calculating the revenue limit and, as a result, increase the likelihood it would limit government spending. The new formula would be based on annual population growth and inflation, instead of personal income. Those indicators are considered less volatile than personal income growth and, therefore, “more likely to constrain growth in state revenues than the current limitation,” according to a state Senate analysis of Amendment 3. In fact, the analysis shows revenues would have exceeded the limits in fiscal years 2004-05 and 2005-06 had the revenue limitation proposed in Amendment 3 been in effect since 1994.
Supporters say the cap is needed to protect Florida’s economy. “We have witnessed first-hand how the government can take too much when the economy is good,” former Senate President Mike Haridopolis said in a prepared statement. “(Amendment 3) wisely limits state spending. Overuse of taxpayer dollars is an unwise tactic that only hinders our state’s growth.”
However, opponents fear catastrophic results during recessionary times or if a natural disaster strikes. With strict revenue limits in place, the state might be hard-pressed to fund necessary services. They point to Colorado, which enacted a cap in 1992, as an example of what potentially can go wrong. With its strict revenue limits, Colorado’s government was strapped to fund education and provide other public services when its economy softened. The state ultimately loosened the rules for setting its revenue limits. “It was disastrous for (Colorado), for their education, for their health care,” state Sen. Nan Rich, D-Weston, told the Associated Press article in May 2011.
The measure passed the Legislature largely along party lines, with Republicans in favor and Democrats against. As with all proposed constitutional amendments, passage requires the approval of 60 percent or more of the voters. If approved, the new state revenue limitation becomes effective in fiscal year 2014-15.
History
Florida is among as many as 30 states to adopt revenue or spending limits, according to a review by the National Conference of State Legislatures. Colorado’s is the most controversial, and among the strictest. Adopted in 1992, and called the Taxpayer’s Bill of Rights (TABOR), it limits both state revenues and revenues from local government. It requires voter approval before taxes can be raised, and its cap is tied to changes in population and inflation.
Florida’s revenue limit, passed by nearly 60 percent of the voters in 1994, is not as strict as the limits Colorado passed. Florida caps state revenues only, and uses a formula tied to changes in personal income. Revenues neared the cap in Florida the first few years after its passage. “Since that time, however, revenues subject to the limitation have generally grown more slowly than personal income,” according to a Florida Senate staff analysis.
That analysis points to a number of reasons for the widening gap between the limit and revenues: Tax cuts enacted by Legislature beginning in 1999; reductions in estate tax revenues resulting from changes in federal law; and the effects of the recession.
In 2005, Colorado eased its revenue limits amid a deepening fiscal crisis. Since then, a number of states have rejected strict revenue limits. In Florida in 2008, 2009 and 2010, legislation to impose stricter revenue limits failed to pass the Legislature. That changed in 2011, when the Legislature passed what became Amendment 3.
Amendment 3
Just as current law requires, Amendment 3 would require the state, upon exceeding the revenue limit, to deposit the excess revenue into the Budget Stabilization Fund, the rainy day reserve the state keeps. If the reserve fund were to exceed its cap, the excess money would be deposited into a fund that supports public education, a change from current law. If the education support fund were to reach its limit, any excess would be returned to taxpayers.
Additionally, Amendment 3 authorizes several ways for the state to bust the cap in any given year, by a supermajority vote of the Legislature or a referendum allowing voters to decide.
What Colorado changed
Until recently, Colorado set its annual limit based on the previous year’s revenues, rather than basing the cap on the previous year’s limit. In other words, when revenues fell below the established cap in recessionary years, the following year’s limit was calculated based on that lower revenue level. The effect was a steady decrease, or ratcheting down, of the revenue limit during tough economic times. This effect was partially to blame for Colorado’s fiscal crisis in the middle of the past decade, and for the eventual easing of the restrictions in that state. In 2010-11, Colorado eliminated that “ratchet down” effect by using the previous year’s cap amount – rather than actual revenues collected – to calculate next year’s cap.
By comparison, Florida bases its current cap, and would base its cap under Amendment 3 if passed, on the previous year’s limit rather than the actual revenues collected, preventing the “ratchet down” effect.
IF YOU VOTE YES:
A “yes” vote means you want the state to change the way it calculates its revenue limit.
IF YOU VOTE NO:
A “no” vote means you do not want the state to change the way it calculates its revenue limit.
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I will vote NO on all amendments coming out of this administration based on the distrust I have for Governor Rick Scott.
I agree Rick Scott is a crook, he was part of Columbia Hospital who was charge with 14 counts of felonies of medicare fraud. They say he was never implicated, cause he resign just before. I don’t trust him with my money or yours..If you want to know more of any politicians and their bio look at Wikipedia. But would like to know alittle more about this amendment 3?
@Wendy and Mike,
how can you say no to Amend.3?? it is not allowing the State to Just “Spend Money”
I don’t like Rick Scott either for the same reasons too.
Mike, please read all the amendments! not all deserve a “NO” I think you might be “cutting off your nose to spite your face” so to speak. Even though I will say no to #4,
Let’s not shoot ourselves in the foot.
Anything that puts the cabash on Governments out of control spending will get my vote.
I will be voting ‘yes’ on amendment 3.
Laws that will provide us with a more accurate way to set spending limits make sense. We want Tallahassee to have what is needed but to always remember there are limits to the cash. We all, or at least we should work within a budget. The budget will help us meet needs and provide the capital to accomplish future goals. Even though times are tough now for many Floridians and it is important to help people when we can, it is also important to help responsibly. We cannot do everything for everyone and having a more accurate way to establish spending limits will help the law makers make choices about how the funds can be spent. They will have to answer the hard questions “what is most important?”. Prioritize spending. Just because you don’t trust Governor Scott is no a reason this amendment. People we disagree with often have good ideas that help. It takes all kinds.
Mike and Wendy your comments have changed my vote to YES. Your anger and emotions controls your behavior. An open mind and seeking truth will guide you to do what is best for FL and USA.
I understand how you feel about remarks like this, but don’t let your anger rule your mind. If you vote “yes” our taxes may increase. Stick with “No” and just except that there are people out there, that will vote a certain way out of anger. Just like you were going to change your vote out of anger. There anger was about Scott, yours were about their anger over Scott. My opinion, is we should vote “No” to protect us from increased taxes in the future. Please put your anger aside and vote for what is right. I hope your day is more peaceful. GOD be with you.
I agree with Maria, thanks to Mike and Wendy, I will vote YES. Decisions made regarding our government can’t and shouldn’t be based on emotion, rather facts and principles.
Seems like you just made an emotional response!
So you’re going to vote yes based on a reaction to 2 people’s comments. What about what’s “best for FL and USA”?
Maria, I agree with you except my vote will not be because of my feelings about a person or where they worked but upon the value of the proposed law it’s self. The responses above you are narrow minded, emotional reply’s and have no basis in FACT. Thank you for expressing your thoughts.
So you are chiding them for voting emotionally, therefore you will childishly (throwing a tantrum and flipping your hair back, saying, “this’ll fix THEM”) vote yes.
Emotionlessly, of course…..
Maria, look at the facts instead of emotions. Financially, if the cap is based on personal income as it is today, it is more likely to reflect the true status of the people of the state. If you base it on population and inflation, it is affected by arbitrary conditions that are sometimes a result of things completely unrelated to actual revenue generation by its people.
So, Mike and Wendy’s emotion-fueled opinions was so profound that you felt compelled to change your vote to “Yes”.
Based on your comment, no other factors were involved in the switch. Not current legislation, not implications of the passage of this amendment, not looking at the proposed formula to determine efficiency..
What was that you said about opening minds and seeking truth?
The mathematics on this are ridiculous, and I had to get help understanding these formuli.
At any rate, I have to agree that limiting revenue as described in this bill sets up nothing but trouble for school district funding in the future and is an underhanded way of adjusting the product instead of solving for x using the proper order of operations. X=Revenue total.
2+x=4 (x = 2)
We are not going to have an x value anywhere close to 2 with all proposed tax cuts… So let’s re-write the equation!
2=x+4 (x = -2)
Congratulations, the Florida Legislature has just failed the FCAT.
Ooh how I love this comment. I struggle w.math & am glad it didn’t make sense to someone else . I seriously lol @ the fcat comment
I believe that amendments such as these, proposed by elected officials, represent an effort to avoid making the difficult decisions that their positions require. If any approved amendment results in an unforseen problem, the legislature can then disavow any responsibility.
The purpose of any constitution is to define how an organisation – a state – is to function. It is not designed to enumerate the specific laws of that organisation.
Is it just me or do the arguments for and against this amendment seem like barely-related side issues? The warning about Co. doesn’t apply to either of Florida’s methods for calculating the limit. From what I understand, basing the limit on population and inflation is MUCH more stable than basing it on income. If we hit another recession, people lose jobs and income is reduced, that would reduce our limit under the current formula, which is what the worry warts are all worried about, right? Under the proposed formula change, population and inflation are barely changed by recession, leaving plenty of room in the budget for services and education. Not only that, but any revenue over the limit is deposited to an overflow account which, as I understand, would be a buffer for when those shortfalls do occur.
Seems like the proposed amendment satisfies both sides: reduced government growth and increased security in hard economic times. And if all else fails, there are options to circumvent the limit, leaving us with no legitimate oposition… Let me know if I’ve misunderstood any aspect of this.
Just think for a minute, if we change the rule from personal income (working people, investors, etc) to population (non-working people, retired people, etc) and inflation,
then the state will get more money to use than what it is getting now. More money, more power. Does the Florida Leg. need more power.
As a FL resident I was pleased to read the Wall Street Journal’s Oct 9, 2012 article titled The Best and Worst Governors which capsulated the Fiscal Policy Report Card On American Governors. FL Governor Rick Scott received an “A” grade as most tightfisted on spending and received an outstanding on tax reform. In my opinion, this assessment is based on facts which I prefer to use when I form my voting decision.
Let’s see, this little jewel hasn’t passed on how many attempts? Colorado had to make changes when things went south, and they don’t have to deal with hurricanes! Why is it I smell a dead fish somewhere? I don’t see a clear outcome on this thing. Is this a conservative effort to cap “big government spending”? If so, the simple answer to that issue is: JUST DON’T SPEND SO MUCH!
As a relative newcomer to Florida, I am at a loss to understand how the state determines changes in personal income, such as wages, dividends, and interest. Without a state income tax, where does the state get its data? Also, I agree with James that the state constitution should not be bogged down with matters that are properly the business of the state legislature. Hopefully, we won’t become like California, where everything its legislature does is either revoked by a referendum, or forced on the state by an initiative proposal, regardless of the financial consequences. In California’s case, why even bother having a legislature?