Opinion
By Steve Nicklas, 7-29-24
A typical government budget operates on a diet of high-calorie spending, without tax-cutting exercise to burn fat. It is commonplace on local, state and federal levels.
On the national level, the runaway federal budget has the clarity of the murky St. Johns River. It has become normal to have $2 trillion annual deficits. Meanwhile, the interest on the mounting $35 trillion national debt is costing $1 trillion per year. This eclipses U.S. military spending.
The state’s budget has been exemplary. With a $3 billion surplus in most years, Florida is the envy of nearly every state. Florida’s fiscal health thrives on robust tourism and population inflows. However, an economic recession would be as troublesome as another Hurricane Andrew.
Locally, the county government, the school board and the individual cities have been decent stewards of tax dollars, with exceptions. While all the municipalities attempt to hold the line on tax revenues each year, few accomplish it. And few talk about reducing expenses, particularly in employee headcount.
When ad valorem revenues increase year over year, it is defined as a tax increase. Yet few municipalities here meet the rolled-back tax rate, where tax receipts are the same. Inflation-adjusted rolled-back rates don’t count.
With rapid population growth, tax increases can be unavoidable. The only municipality with slow growth is Fernandina Beach – and it has the worst record in taxing/spending/regulating over the last decade.
The city has been excessive: in hiring employees, feeding an enormous staff; in purchasing equipment/vehicles as part of an oversized fleet; and in funding pet projects, with spotty benefits to residents. The main thing growing in Fernandina Beach is the government.
The local school district has been hampered by funding and staff shortages. To hire and retain teachers, the district asked voters to approve a special 1-mill tax, outside of other taxes.
Voters did, but now have regrets. Not all the revenues are going toward teachers, for one thing. And the special tax is generating substantially more revenues than expected (and the district is keeping/spending the lavish proceeds).
Meanwhile, the county government has expanded exponentially with the population boom. However, the county has refrained from issuing long-term debt, with a pay-as-you-go discipline. This is a healthy habit – and should be duplicated by others.
Things here appear fiscally frugal in comparison to the national disaster. There, colossal spending has fueled inflation across the country like a hyped-up injector. And worse yet, on frivolous and misleading initiatives. Like the Inflation Reduction Act, which feeds inflation.
And President Joe Biden/Vice President Kamala Harris have both promised to let the beneficial Trump tax cuts expire next year. This would raise income taxes on nearly all workers, across all brackets. Small businesses would also endure higher taxes.
In addition, Biden/Harris have proposed hiking taxes on both income and capital gains to over 40 percent. And the corporate tax rate is being targeted at 28 percent, according to their budget proposals. This would be higher than communist China.
There is more. Biden/Harris are supporting a carbon tax, a climate pollution tax, and a tax on unrealized capital gains. Take a deep breath. That’s too mentally taxing to even think about – or digest.
Steve Nicklas is a financial advisor on Amelia Island and an award-winning columnist. His columns appear in weekly newspapers in Northeast Florida. He has published a book of his favorite columns, “All About Money.” He has also done financial reports for area radio stations. He can be reached at 904-753-0236 at [email protected].
