Bloomberg – Business Week
Florida Governor Scott Says Budget Gap Can Be Closed With Cuts – By Simone Baribeau
January 11, 2011, 11:40 AM EST
From this article regarding the state of Florida and it’s budget deficit problems in which the governor has stated that he will fix the problem with cut backs and also promising 700,000 new jobs to be created over the next 7 years. This may pove difficult promise to meet.
First, Florida is a haven for the movement of homeless and with that the added burden of assistance from state and local funds. So cut backs with current state agencies and programs will constantly have to be addressed and those state and local jobs will have to ultimately be cut, only adding to the unemployment situation going forward.
Going out and getting business to enter your state and providing assistance with certain tax benefits towards those employers is a worthy endeavor. However, you must have to present certain incentives to encourage those business to move their facilities or expand their facilities in your state and locale. The geographic location is very important to any business or manufacturing concern as it must provide for their transportation logistics in regard to ability to move their products and or services to their customers.
Many of Florida’s leading employers already have expanded overseas to various countries that provided massive incentives for U. S. based companies to build, transfer, or expand their facilities to their country. This has been going on for decades. Getting them back will be difficult. Trying to get new expansion to remain in the U. S. is more likely, except, that it would be difficult to see any decision by large companies from any country desiring to locate or build out major facilities for expansion, given the current economic environment. Although, many companies have built up large sums of cash, I would not expect them to necessarily use that cash to build more expansion, due to many unresolved issues by our country in regard to health care cost and also uncertain fiscal policy issues.
Consider the items that we have facing us as a nation, such as gasoline prices and more importantly the cost of health care. When factoring just those two items alone would in itself provide major road-blocks toward expansion.
I could go on about each of these issues alone, but back to the point. The point is that we have a long ways to go in correcting the excesses of just not the mortgage foreclosure fiasco with the MBS operations, but in the excesses of government spending on all levels. Reductions will or must be curtailed and it will be difficult for those that cannot accept the fact that we are not entitled to any services that we cannot pay. Those reductions will entail major cut-backs in state and local jobs and programs and increase the job-less rate. Government job cuts will also cut into the funding of their respective pensions which will also create further cuts in many situations in order to meet other obligations.
Florida’s current real estate taxes are not conducive to home purchases and even less for investment property. Infrastructure and the cost of such have been increased over the years to raise revenue budgets to such levels as to discourage purchases in homes. Florida is one of the states that is faced with some of the most difficult situations to address in order to balance their budgets. This cost of property taxes along with high insurance rates, if indeed such insurance is able to be obtained on the property, lend to the poor housing market in Florida.
To promise to create 700,000 new jobs by bringing business from overseas to locate in the state of Florida is unrealistic to project to the people at this point. He allows himself 7 years in order to create that number of jobs, which is basically a number that provides him an out for any short-fall on his promise.
Although, he states that they have no problem with their current budget as long as they make certain they “don’t waste a dollar”. The state’s economist have estimated that they have a short-fall of 12% in revenues expected for June 1, 2012 budget year, an increase of some 2.5% since last month.
Infrastructure in General:
State and local governments in most all locales of the country will ultimately have to cut their budgets. This will generally entail the cutting of existing programs and jobs. To give promises, does not address those hard issues that should be made and addressed before the public. The public should understand and support our leaders in solving the situation versus just allowing a default which would be unwise. We are not all going to agree on those areas of cuts, but it should be performed in a deliberate, thoughtful and impartial manner.