Florida Falls in ‘Economic Freedom’ Ranking
Florida fell in the latest Economic Freedom of North American Index put out by the conservative non-profit Frasier Institute. The annual report ranks the 50 states and Canadian provinces and territories based on factors like taxation, government spending and regulations and labor market freedom.
Florida came in 25th place, down from 22nd in last year’s report and down from third in 2006. This year’s report only reflects data through 2010, before Gov. Rick Scott took office.
“Given the huge tax hike they put in in 2009, I wasn’t all that surprised,” said Florida Gulf Coast University Economics Professor Dean Stansel. “But given what we’ve seen from Gov. Scott’s fiscal agenda, at least, I think we’ll see a reversal next year and we’ll see Florida climb back up in the rankings at least somewhat. I think next year will be a very different story.”
Stansel says Florida has a built-in advantage by not having a state income tax and state lawmakers heading into the 2013 legislative session are not projected to face a budget shortfall for the first time in five years according to state economists.
“That’s one of the biggest challenges that I think, in a sense, politicians face,” said Stansel. “When the money’s pouring in, which frankly it isn’t yet, but when you have these surpluses, what do you do with them? There’s such temptation to spend it on existing programs or start up new programs and in fact, what we need to do is either cut taxes or put some aside for a rainy day so that when the inevitable recession comes again, which essentially we’re kind of still in one, we’ll have money set aside to cover the spending needs that don’t go away and in fact get worse during a recession.”
The top five and bottom three U.S. states in the economic freedom index remained relatively unchanged from last year. Tennessee, South Dakota, Delaware, Texas and Virginia came in at the top while Vermont, New York and Rhode Island were found to have the least economic freedom.
The Canadian provinces saw improvements on this year’s index. Stansel says that’s because they don’t have a huge military presence overseas like the U.S. and because Canadian lawmakers didn’t pass stimulus packages like America during the economic recession.