February 2, 2017

Florida Policy Institute: Florida’s Shadow Budget Needs Greater Scrutiny

ITEP Work in Action

Silent spending, in the form of numerous kinds of tax breaks, costs Florida billions of dollars in lost revenue a year. Unlike money spent through the state budget process, this “shadow budget” is not routinely examined to see if it is meeting worthwhile goals or promoting a stronger economy. 

This is money that is spent through legislation that changes the tax code. While spending through the state budget is subject to yearly review and reauthorization, spending through the tax code – called tax expenditures – takes the form of revenue the state foregoes, rather than money the state collects and then spends. In either case the result is the same – the state doesn’t have money it otherwise would.  Once enacted, these expenditures tend to remain in statute without any expiration date. 

State tax expenditures are not inherently good or bad.  The problem with them arises because, unlike actual spending, they are not routinely evaluated to ensure they deliver on objectives. Stronger evaluations and routine monitoring of such silent spending would give policymakers and the public a much stronger handle on whether the money the state is giving up is being put to good public use.

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