Estimated Tax Reductions in Florida From 1999 and 2007

Summary
From 1999 to 2007 taxes in Florida were reduced by $19.3 billion (in 2007
dollars).
Data and Analysis
With the exception of the estate tax cut (discussed below), all tax measures
estimates are derived from the Fiscal Analysis in Brief.1 The Fiscal Analysis
in Brief provides two-year revenue forecasts for all legislative measures
affecting revenue during a legislative year. Legislative actions potentially
affecting revenue could impact general revenue, trust fund revenue, or local
revenue. The estimates presented below show the total changes from these
three revenue sources combined.
The two-year revenue estimates include cash estimates reflecting the
change in revenue in the two fiscal years following the legislative session.
For example, the 1999 Fiscal Analysis in Brief contains cash estimates for
changes in revenue for the 1999-00 and 2000-01 fiscal years. These data are
presented in Table 1.
Table 1. Cash Revenue Changes (Nominal Dollars)
First Fiscal Year
Second Fiscal Year
Revenue
Revenue
Change
Change
Legislati
Fiscal
(Millions
Fiscal
(Millions
ve Year
Year
)
Year
)
1999 1999-00
-$802 2000-00
-$685
2000 2000-00
-$450 2001-02
-$458
2001 2001-02
-$95 2002-03
-$89
2002 2002-03
-$215 2003-04
-$126
2003 2003-04
$176 2004-05
$96
2004 2004-05
-$92 2005-06
$158
2005 2005-06
-$103 2006-07
-$72
2006 2006-07
-$272 2007-08
-$282
Some of these tax changes are temporary tax cuts measures. For example,
sales tax holidays typically reduce taxes for only a single year. However,
other cuts are recurring tax reductions. The revenue effects from these
permanent reductions are not estimated beyond the two-year budget
window. Table 2 provides the value of these recurring cuts as reported by
1 The Fiscal Analysis in Brief (available here) is published annually by
Floridas Office of Economic & Demographic Research. The tax cut data
used for this analysis originate from the table entitled Measures Affecting
Revenue and Tax Administration.

the Fiscal Analysis in Brief. The second fiscal year recurring estimates are
used. For example, in the 1999 legislative session recurring tax cuts totaled
$660.3 million in the 1999-00 fiscal year and $681.7 in the 2000-01 fiscal
year. The analysis presented below uses the 2000-01 recurring cut of $681.7
as better estimates for how the revenue measures in the 1999 legislative
session would affect revenues in later years. Table 2 presents the second
fiscal year recurring estimates for each legislative year.

Table 2. Recurring Revenue Changes

Legislative
Year

1999
2000
2001
2002
2003
2004
2005

Recurring
Revenue
Change
(Millions)
-681.7
-452.4
-138.5
14.3
120.5
167.5
-66.4

Fiscal Year
of Recurring
Amount
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07

Total
State
and
Local
Revenue
(Billions
)
92.85
93.3
111.15
129
132.25
135.5
153.1

Recurring
Revenue
Change as % of
Total Revenue
-0.7%
-0.5%
-0.1%
0.0%
0.1%
0.1%
0.0%

Notes: Historical revenue data is the total of state and local revenue for each year as
reported by the U.S. Census Bureau, State and Local Government Finance, available
here. The Census Bureau does not provide revenue data for the 1999-00 and 2001-02
fiscal years. The average of the preceding and subsequent fiscal years are used for the
calculation. Also note that the recurring amount for the 2006 legislative year is excluded
as the calculations below do not extend beyond the 2007-08 fiscal year, and thus the
recurring estimate is unnecessary.

To estimate the revenue impact of legislative actions in years, it is assumed

that the size of the recurring tax cut increases or decreases proportionally
with changes in total revenue. For example, in the 2001 legislative session,
the estimated size of the recurring changes was -.1% in the 2002-03 fiscal
year. In the 2003-04 fiscal year and in subsequent years, it is assumed that
taxes were -.1% lower due to the recurring changes made in the 2001
legislative session. Table 3 shows the annual effect (in nominal dollars) of
both cash tax changes and the expected recurring changes. The recurring
estimates are in bold.

Table 3. Nominal Revenue Changes from Cash and Recurring Estimates (Millions)
Legislat Fiscal Year
Total
ive Year
Revenue

Change
From
Specific
Legislati
Session

1999
2000
2001
2002
2003
2004
2005
2006
Total

199900

200000

200102

200203

200304

200405

200506

200607

200708

-802

-685

-685

-816

-947

-971

-995

-450

-458
-95

-539
-89
-215

-626
-161
-126
176

-641
-165
15
96
-92

-657
-169
15
123
158
-103

-1134

-1238

-1659

-1683

-1758

-1627

1124
-742
-191
17
139
189
-72
-272
-2056

1270
-839
-216
19
158
214
-75
-282
-2291

-802

In addition to specific legislative actions, Florida taxpayers also benefited

from the phasing out of the states estate tax, which Gov. Bush supported.
Table 4 provides estimates the reduction in tax liability from the phase-out.
Revenue projections without the phase-out are not available. For the
purposes this analysis, it is assumed the estate tax revenue would increase
at 3.2% per year. This figure is equal to the average annual growth rate of
the estate tax revenue from the 1998-09 fiscal year to the 2001-02 fiscal
year.2 This likely understates the actually growth in the estate tax in later
years as the 2001-02 fiscal year occurred during a recession.
Table 4. Estate Tax Projected Revenue Changes from PhaseOut
2002- 20032004- 20052006200703
04
05
06
07
08
Estate
Tax
-200
-397
-467
-727
-778
-848
Table 5 totals the revenue changes that occurred during Governor Bushs
tenure. Thus far all figures have been presented in nominal dollars. Table 5
adjusted these estimates for inflation. In total, the tax reductions discussed
2 Revenue estimates are derived from the June Monthly Economic reports,
available here.

-8295
-4951
-1085
-275
693
469
-250
-554
-14248

above reduced Floridian taxpayers tax burdens by $19.3 billion (2007

dollars) from 1999 to 2007.
Table 5. Total Value of
199 200
9-00 0-00
Nomina
l
1,13
Dollars -802 4
Real
2007
Dollar
1,36
s
-998 6

Revenue Changes Made From 1999 to 2007 (Millions)

200 2002 2003 2004 2005 2006 200 Total
1-02 -03
-04
-05
-06
-07
7-08
1,23 1,85 2,08
2,22
2,35
2,83
3,13 17,66
8
8
1
5
4
4
9
5
1,45
0

2,14
2

2,34
4

2,44
2

2,50
0

2,91
5

3,13
9

19,2
97

Notes: Inflation adjustment uses CPI-U. Available here.

Data Limitations and Caveats

The above analysis does not extend beyond the 2007-08 fiscal year. This
likely understates the true value of the tax reductions since it omits the tax
savings from later years that were a consequence of reforms occurring
during Governor Bushs administration.
No attempt has been made to disaggregate tax changes from more revenue
changes unrelated to taxes. These include revenue increases from the state
lottery, tuition increases in state universities, and changes in state employee
health premiums.