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State Budget and Taxes
A solid economy can be characterized by the quality of life enjoyed by the large majority of a state's citizens. A reasonable tax structure leaves families with more of their own money to spend as they see fit, ultimately spending this money within their local and state economies. By having more of their income at their disposal, families are more likely to make larger purchases, such as a home.
Why Is This Important?
Florida's lower tax burden will likely be a major source of attraction to new residents and businesses, and key to Florida's future growth. The associated higher wages and income lead to stronger levels of buying power among residents and stimulate the economy. Sound budget management and healthy reserves has assisted Florida as the struggling national economy has impacted the state. Florida is enduring difficult economic times, but minimizing negative impacts on citizens and services.
How Is Florida Doing?
Following state action and voter approval of property tax cuts, the average property tax burden dropped for the second consecutive year, showing Floridians paying an average of ten percent lower than 2007. Florida approved $713.9 million in tax cuts in the 2010 budget. General revenue in the state budget declined by 10 percent while state reserves grew substantially to more than $1.1 billion by the end of 2009-2010 fiscal year.
Federal Stimulus Funds and Taxes
The American Reinvestment and Recovery Act (ARRA) of 2009 provided billions of dollars in tax relief to Florida businesses and individuals. Close to $10 billion is targeted to assist Florida businesses maintain or create new jobs in addition to providing relief for individual Floridians. Nearly all of the tax relief will go to businesses and individuals during fiscal years 2008-09 and 2009-10.
Some of these funds, in the form of tax credits, are targeted to first time homebuyers with the goal of jump-starting the housing market. Others involve education tax credits, increases in the Earned Income Tax Credit, the “Making Work Pay” tax credit, and the extension of relief from the federal Alternative Minimum Tax (AMT), to name a few. Florida businesses can enjoy quicker recovery of capital expenditures, along with accelerated credits for Research and Development, among many other provisions.
Scorecard
What Influences State Budget and Taxes?
State and local governments decide which taxes and rates to impose. Local governments in Florida at times may hold referendums to gain voter approval of a higher sales tax to fund local projects. Local governments have had the freedom to control property taxes, but the state ordered rollbacks in 2007 while voters approved further reductions in a January 2008 referendum. In large part, tourism plays the major role in generating tax revenue in Florida.
What Is the State's Role?
The state determines the level of the state sales tax and use tax and what areas are exempt from the sales tax. Adding any new taxes or cutting existing taxes (as occurred with the Intangibles Tax) is within the authority of the Legislature. The Legislature together with the Governor may order rollbacks of local property taxes (which occurred in 2007).
For More Information
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Contact:
Florida Legislature, Office of Economic and Demographic Research
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(850) 487-1402
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On the Web:
http://www.edr.state.fl.us
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