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Fla. TaxWatch: Put trust back in trust funds

 

TALLAHASSEE, Fla. – March 20, 2014 – Florida TaxWatch called on the Legislature to raise the bar on trust fund money “swept” into the state’s general revenue fund: Require the passage of individual bills for each trust fund amount swept into General Revenue (GR).

The report, “Putting the Trust Back in Trust Funds,” says that separate bills for each sweep would still give the Legislature flexibility when budgeting, but it would also require members to weigh the impact of their decision.

Florida Realtors has been active in trust fund issues for a number of years. Money from documentary stamp tax revenues flows into the Sadowski Trust Fund and is earmarked for affordable housing. However, in many years – and notably the recent tight budget years – the Florida Legislature has swept most of the money into general revenue and used it for other projects.

“Florida’s lawmakers must have flexibility when determining how to craft our state budget, but trust funds are created to fund specific needs and draining them can severely impact those needs,” says Dominic M. Calabro, president and CEO of Florida TaxWatch, an independent, nonprofit research institute. “This increased accountability measure will ensure that the Legislature has access to the funds they need – but will prevent overzealous sweeps that may have unintended consequences.”

Since 2008, the Legislature has swept more than $3.4 billion from trust funds to GR to balance the state budget. Lawmakers have already proposed $174.2 million in trust fund sweeps for the 2014-15 fiscal year budget.

Trust funds are created to provide funds for specific programs, often tied to the revenue source. Sweeping a fund can have negative effects, such as reducing job creation and turning fees that are paid for specific services into general taxes.

The Florida TaxWatch report acknowledges that trust fund sweeps may be occasionally necessary to ensure certain core services do not negatively experience budgetary shortfalls more than other, non-core services. However, before sweeping a fund to more evenly distribute revenue, the Legislature should consider the impact of the sweeps on all areas of the budget.

Requiring a separate general bill for each trust fund sweep would allow input from legislators, testimony from concerned parties, a staff analysis and, where appropriate, an economic impact estimate.

The accountability recommendation from Florida TaxWatch is posted online.

© 2014 Florida Realtors®

Related Topics: Taxes, Workforce housing