Bloomberg News

Florida Tax-Cut Plan Almost Erased by Medicaid Costs, Scott Says

December 09, 2011

Dec. 1 (Bloomberg) -- Florida Governor Rick Scott said he has whittled down a corporate tax-relief plan compared with what he sought last year because of a ballooning deficit driven by health-care spending.

“Medicaid is growing way faster than we thought,” the former hospital executive said yesterday. “Reducing taxes, as you would expect, when you walk in with budget deficits, is harder than when you don’t have budget deficits.”

Florida, which closed a $3.8 billion budget gap for fiscal 2012, is facing another of as much as $2.3 billion next year. in an interview in Orlando, Scott said he hadn’t anticipated a 2013 deficit, partly because he expected to get a federal waiver letting the state expand its use of managed care for recipients of Medicaid, the health-insurance program for the needy. The state hasn’t gotten the permission needed to make the changes.

In February, a month after the first-term Republican took office, he proposed $4.1 billion in tax cuts spread over two years, including $1.1 billion in corporate relief. Lawmakers passed about $300 million of that, including about $30 million in reduced business levies.

In October, Scott, who turns 59 today, scaled back the plan to $8.4 million in corporate income-tax reductions and a $21.6 million cut in tangible personal property tithes. The first-term governor may call for more cuts next week, when he introduces his 2013 budget, said Amy Graham, a spokeswoman.

Surging Medicaid Costs

Medicaid costs rose to about $20.3 billion projected for this fiscal year in Florida, from about $19.8 billion in 2011, with the state’s share surging 23 percent to $9.48 billion from $7.7 billion, legislative analysts said in an October report. The state’s share of the joint program partly funded by the federal government is forecast to rise 2.7 percent to $9.74 billion in 2013 and total costs may rise 15 percent by 2015.

“Revenues are growing because our economy is getting better, but Medicaid is growing faster,’’ said Scott, who started what became one of the nation’s largest hospital chains. He said he remains committed to cutting taxes and reducing regulation to increase the number of jobs in the state by 700,000, a central promise of his 2010 campaign.

Florida’s jobless rate in October was 10.3 percent, down from 11.8 percent a year earlier while still higher than the national average of 9 percent. The state’s economy has added almost 107,000 jobs since January, government figures show. The end of federal economic-stimulus funds for schools and a court decision blocking plans to privatize some prisons have put more stress on his budget, Scott said.

“The federal government has over $500 million in our education system they allocated, now they’re taking that back,’’ Scott said, calling the situation “frustrating.”

“That’s a lot of money,’’ the governor said.

The failure of Congress’s deficit-cutting supercommittee, producing a threat of automatic cuts in Medicare funding in 2013, also will put pressure on Florida’s budget, Scott said.

“There are going to be a lot of tough choices,’’ he said.

--Editors: Ted Bunker, Pete Young

To contact the reporter responsible for this story: Simone Baribeau in Miami at simonebaribeau@gmail.com

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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