Listen to FCIR Contributing Editor Tristram Korten discuss this story on Florida NPR:
By Tristram Korten
Florida Center for Investigative Reporting
When Rick Scott ran for governor, he vowed to cut state government, corporate income taxes and business regulations. As a result, he promised, Florida would become a corporate-friendly state that would attract new companies and new jobs.
“We’re going to run this state like a business,” he told supporters in Panama City in October 2010.
For this story, FCIR partnered with media including Florida’s NPR affiliates, the Florida Times Union in Jacksonville, El Sentinel in Fort Lauderdale, Creative Loafing in Tampa, Florida Courier in St. Petersburg, Daytona Times and others. Links to media partners’ stories will be posted here as they are published online:
He won the election and cut state government, corporate taxes and business regulations. Now he’s one of the most unpopular politicians in the country. A December poll by Public Policy Polling in North Carolina, which works mostly with Democrats, showed his approval rating was 26 percent, the lowest of any governor in the country. This was down from a poll in May by the nonpartisan Quinnipiac University, in Connecticut, showing his approval rating at 29 percent.
But Scott says his policies are working. As evidence, he cites a declining unemployment rate and rising job growth. “We were able to have a positive impact on Floridians in 2011,” Scott wrote in a year-end announcement.
A Florida Center for Investigative Reporting examination of data reveals that the Scott administration’s claims of success are premature, even inaccurate.
According to federal and state labor statistics, government and academic studies, economic forecasts, and interviews with economic analysts — information that has not been widely reported — FCIR has found:
- There’s no evidence Scott’s policies are responsible for any of the new jobs in Florida over the past year.
- The jobless rate is falling because so many Floridians have stopped looking for work that they aren’t being counted anymore.
- Steep cuts in state spending have further squeezed the poor and unemployed, and in turn, the municipalities in which they live.
- The majority of new jobs are in the lowest-paying sectors.
- Wages have fallen for the poorest workers.
- Poverty has increased.
- Florida has one of the highest populations of uninsured in the country.
Meanwhile, Scott has eliminated the corporate income tax for half the businesses that paid it, and is working on eliminating it for another quarter that still do. He has also rejected federal money to implement a new health care law he is opposed to, in both cases forgoing tens of millions of dollars.
“I think it’s a matter of priorities,” says Laura Goodhue, executive director of Florida CHAIN, a nonprofit, nonpartisan organization in Jupiter that advocates for affordable health care. “There are many corporations in Florida that don’t pay taxes. There are a number of revenue opportunities the state is not taking advantage of. We’re either funding corporations, or we’re funding people.”
Rick Scott, who has never held public office before, ran on the promise that he would create 700,000 jobs over seven years above what was forecast. After the election, he backed away from that claim, saying he really meant he would create a flat 700,000 jobs — all jobs state economists had already predicted would be created. And when challenged, Scott released a statement that didn’t clarify things, saying he was committed to creating “700,000 jobs over seven years no matter what the economy might otherwise gain or lose.” Scott is also taking credit for what he says is an improving job market in Florida. “We’ve had plenty of success so far,” he told supporters recently, referring to a drop in unemployment.
“It appears Florida is on the right track,” Scott’s press secretary Lane Wright wrote in a Dec. 14, 2011, email. “Though the nation’s unemployment rate has remained virtually flat (dropping from 9.1 to 9.0), Florida’s unemployment rate has dropped from 12 percent before Gov. Scott took office to 10.3 percent as of October. We’ve created more than 118,000 private sector jobs. If you account for losses in the public sector, we’re still more than 106,000 net positive.”
(Since Wright wrote those comments, the federal unemployment rate has dropped to 8.6 percent, and Florida’s dropped to 10 percent. The governor released a year-end statement saying: “Florida has gained over 120,000 private sector jobs.”)
But those unemployment numbers, released by the U.S. Department of Labor’s Bureau of Labor Statistics, only tell part of the story.
They don’t reflect “discouraged workers,” people who have not actively sought employment in the previous four weeks, or the underemployed, people who gave up looking for full-time jobs and took part-time jobs instead, or those who have gone back to school.
Florida’s rate for all of these categories together, according to federal calculations, is 18.2 percent — the eighth highest in the country. That’s lower than 2010’s 19 percent, but less of a decline than the unemployment rate that Scott cites.
The labor force (the number of people with jobs or looking for jobs) has shrunk by 41,000 people between November 2010 and November 2011, according to the state’s Department of Economic Opportunity.
Unemployment looks like it is declining more than it is because as people drop out of the job hunt, fewer are being counted. “It creates a bias so that it looks like things are getting better, but the labor force is just shrinking,” says Sean Snaith, an economics professor at the University of Central Florida in Orlando and director of the nonpartisan Institute for Economic Competitiveness.
For the economy to recover, Snaith adds, three things need to happen at the same time: payroll has to grow, unemployment levels have to decline, and the labor force has to increase. “We haven’t had all those things lining up,” he says.
Meanwhile, what growth there is has been generated in low-paying jobs, such as in the tourism industry. From July 2010 to July 2011, the largest number of new jobs created in the state came in the leisure and hospitality industry, which pays average annual wages of $21,448. That compares to $41,750 for all Florida industries, according to statistics from the state’s Agency for Workforce Innovation. (Tourism is historically a strong industry here. In 2006, the height of Florida’s boom years, it grew 44 percent. This lagged behind the “enormous growth,” 173 percent, in the higher-paying professional and business services industry, according to a 2007 FIU study.)
Along with hotel workers, Florida’s job-creation machine is also making administration and waste management services — with jobs such as secretaries, office administrators, janitors and office cleaners — one of the three fastest-growing industries, according to the “State of Working Florida,” a study published in September by Florida International University’s Research Institute on Social and Economic Policy in Miami. Between January and July 2011, the state added about 14,000 of these jobs. Meanwhile, jobs with benefits in higher-paying industries such as information, finance and insurance, wholesale trade, along with federal, state and local government, all saw negative growth.
And the surge in tourism and cleaning jobs doesn’t mean those workers are getting paid any better. The bottom 20 percent of earners in Florida have seen their wages actually drop, according to the FIU study, while they went up modestly for the state’s top 20 percent of earners.
Scott can’t take credit for any of those new jobs in Florida, either.
The job growth that Scott says shows his policies are putting us on the right track were predicted by state economists in February 2011, a month after Scott took office, as Florida eased out of the recession. Specifically, the Office of Economic and Demographic Research, which tracks and forecasts economic trends for the state legislature, predicted that Florida’s economy would grow by 129,000 non-farm jobs (including the public sector) in the 2010-2011 fiscal year.
Scott’s Controversial Policies
Gov. Rick Scott pursued several controversial policies during his first term in office. Among them:
— Tristram Korten
“The bottom line is that job growth was expected to rebound significantly after the recession and its aftermath, independent of any governor’s actions,” says Alan Stonecipher, an analyst at the Florida Center for Fiscal and Economic Policy, a think tank in Tallahassee that has been consistently critical of Scott’s agenda. “There’s no evidence his policies are creating jobs.”
As a result of the stagnant economy, and the types of jobs available, Florida’s poverty rate has gone up three years in a row, to 16 percent in 2010, according to the U.S. Census Bureau. The number of uninsured in Florida, 22.4 percent, is the highest in the nation.
Today the economy is recovering, slowly and in fits and starts. But “robust growth” is still at least two years away, according to the “Florida and Metro Forecast,” published by the UCF’s Institute for Economic Competitiveness, which stated that “2011, instead of a year of gaining momentum, has turned out to be one in which the economy came perilously close to stall speed.” This is quite different from how Scott presents the year.
On a Thursday afternoon in May 2011, Scott sat down at a wooden table during a ceremony at the Villages retirement community near Orlando to sign his first state budget. Scott surrounded himself with supporters. In fact, anyone who could be identified as not supporting the governor was escorted out, including members of the Villages Democratic Club. The $69 billion budget was balanced, as the law required, and closed a $3.6 billion deficit. In the process, Scott vetoed more than $600 million in spending.
He would later tell the legislature that it was the “most fiscally conservative state budget in the country.”
The budget that passed was not as severe as Scott originally wanted. For instance, he requested a 10 percent cut to education funding, but the legislature passed 8 percent in cuts (a significant blow to school districts entering their third year of budget reductions).
Scott felt proud enough of the budget and its effects to brag to a roomful of applauding supporters in September 2011 that “we have 15,000 less government jobs in the state of Florida.” (He appears to be including federal and local governments in that number; from November 2010 to November 2011, the state lost 6,200 jobs, according to federal job statistics.)
But the elimination of all those state employees from the payroll was not a net savings for taxpayers. In many cases, costs and responsibilities were simply pushed onto smaller governments.
Florida has the lowest ratio of state government employees to residents in the country: 99 state workers per 10,000 residents, compared to a national average of 178 per 10,000 residents, according to the latest figures released by the state’s Division of Human Resources Management.
Those workers cost the least in the nation, $38 per resident compared to a national average of about $75. So there wasn’t a lot of fat to trim. Cutting the state’s ability to provide services may just have passed the buck to hard-hit urban areas. Florida has 10 percent of the country’s homeless population, according to the U.S. Department of Housing and Urban Development. In January 2011, Florida claimed one-third of all U.S. homeless who didn’t have any shelter.
For instance, Tampa saw funding for its State Housing Initiatives Program, the state’s portion of housing assistance to local municipalities, drop from $3 million in 2008 to $0 in 2011. The 2012 budget has funded it at about $286,000.
“Foreclosures are up and homelessness is up,” says Thomas Snelling, Tampa’s acting growth management director. “At the same time, we’ve had reduced funding to help poor people, so yeah, it’s had a direct impact.”
It’s happening all over the state.
“We have seen a lot of impact in the area of social services,” says Miami Mayor Tomás Regalado. “Specifically, whenever the state cuts the Department of Children and Families, we see an increase in homeless families in the city. I’ve never seen it to this magnitude before. As we speak, we have 50 families in motels we are paying for. Some of those families are single moms who have been cut from the [state] program because of cuts to DCF.”
Such extensive cuts were not necessary, Regalado asserts. Miami was able to eliminate more than $100 million over two years from a $1 billion budget without firing anyone. “Instead of laying people off, we reduced salaries, we got concessions by the unions,” he says. The city consolidated some jobs on the executive side, but didn’t have to lose one firefighter or police officer. “We didn’t add to the problem (of a down economy) by laying people off.”
Now the state cuts have put a lot of pressure on his struggling city.
“If defending social services does not make you a conservative, then call me a liberal,” Regalado, a lifelong Republican, says. “Because you cannot eliminate poverty by chasing the poor out of the city. They are our responsibility.”
To get state funding to where it was before the recession, Scott is relying on hundreds of thousands of people finding jobs, then buying things, including property. That’s because Florida, which does not have a personal income tax, relies heavily on sales and property taxes to fund government. That could take a while. Florida lost 1 million jobs during the recession and property values have cratered, although they are seeing marginal gains lately.
But Scott may not be interested in funding government. The momentum of tea party activists, a fractious group otherwise unified by their opposition to taxes and government growth, swept Scott and Republicans around the country into office in 2010. Scott makes it clear they have his allegiance. He unveiled his proposed budget in February at a tea party rally in Central Florida.
Across the country, this new class of governors and state legislators are pursuing similar, coordinated agendas, such as voter ID requirements, curbing union rights and reducing business regulations.
In June, Scott attended a meeting at a Ritz-Carlton in Colorado sponsored by David and Charles Koch, billionaire industrialists who believe in minimal government and who helped fund an aggressive campaign to win Republican majorities in state legislatures across the country in 2010.
“(Scott) believes that unfettered corporate activity will create hundreds of thousands of new jobs for the state. And he seems to think everyone will benefit from this even if budget cuts curtail services and hurt education,” the Center for Fiscal and Economic Policy’s Stonecipher says. “What those things end up doing is put more money in the pockets of corporations. It’s not the taxes or regulations that are strangling businesses and jobs. It’s that there’s not enough demand in the economy for producing goods and services.”
David Hart, executive vice president of the Florida Chamber of Commerce, which endorsed Scott, disagrees. “There is ample evidence that lowering taxes stimulates job growth,” Hart wrote in an email. “In simplest terms, if you want less of something, tax it! If government raises taxes on investment, production and work, you will see economic contraction.”
The Center for Fiscal and Economic Policy and others advocate revenue-generating approaches including removing some, if not all, of the 250 items exempt from Florida’s sales tax; requiring the collection of sales tax for Internet purchases; and reimposing corporate income taxes.
“Raise taxes? On families that are already struggling?” Hart asks.
The Chamber of Commerce does back a requirement that companies collect an Internet sales tax, out of fairness to so-called “brick-and-mortar” businesses that are required to do so. But the governor has indicated he doesn’t “want to see taxes go up in a soft economy,” Hart says.
“To me these things are pretty sensible,” UCF economist Snaith says about the revenue-generating proposals. “If you want to have a minimalist tax structure, then the taxes you do have can’t have these loopholes in it.”
Following bleak poll numbers this summer, Scott shuffled some staff and began a public relations campaign to soften his image. A couple of months ago, he chose a basement room in the Capitol to unveil his budget, instead of a partisan rally. And he vowed to increase money for schools. But his opposition to raising taxes remains intact. To pay for the school funding in his budget, he’s targeting Medicaid, the health care program for low-income families.
And government workers? He’d like to cut another 4,500 jobs.