Crist’s Costly Populism

April 13th, 2010 at 12:52 am | 18 Comments |

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As a reformist Republican, I wish I could support Florida Governor Charlie Crist in his campaign for United States Senate. On the surface, he shares my values. After all, he has a measure of genuine concern about the environment, seems willing to deemphasize polarizing go-nowhere social issues (despite his own basically conservative views on them), and, faced with a decline in state revenues, made some difficult cuts in his state’s budget.  A close look at his record, however, reveals something a little more important: he’s a terrible governor given to populist excess.

Crist’s  failures all stem to what’s certainly his most important legislative accomplishment; a massive property insurance reform that he rammed through the legislature soon after taking office. The reform, passed just days after his oath of office, attempted to keep prices lower for hurricane-prone Florida homeowners through a system of subsidies for individuals and businesses. Under Crist’s  original plan, homeowners unable to find “affordable” property insurance in the private market could buy coverage from a state agency called the Florida Citizens Property Insurance Corporation, insurers received government subsidized reinsurance (insurance for insurance companies) to keep them in the market, and poorer residents living in coastal areas got modest help to retrofit their homes.

The plan hasn’t worked. On one hand, Florida residents still pay over $1,500 a year on average for property insurance while the promised retrofitting help for lower-income residents (the most sensible part of the program) was eliminated at the first sign of a budget shortfall. Large household name insurers have essentially stopped trying to do new business in Florida while many small upstarts with shaky finances have moved in.  On the other hand, the state has taken on massive contingent liabilities. The Hurricane Catastrophe Fund that subsidizes insurance companies has about $4 billion in hard assets to pay claims that could easily top $25 billion in a bad storm season.

Because of Crist’s other major policy achievement, furthermore, the state would have no way to pay these if a storm hits. Shortly after he took office as governor, Crist convinced voters to approve a series of revisions to the state’s property tax capping scheme. Most importantly, the revisions made existing property tax caps “portable” so that individuals with capped taxes who moved within the state would continue to pay taxes at a lower rate.  This portability along with a number of other changes to the system both makes the overall system deeply unfair–wealthy senior citizens in big houses can pay less in taxes than single-parent families in small ones in the same neighborhood–and make localities more  reliant on state revenue to fund public schools and core services. In addition, it almost insures that future governments will have to hike other taxes (sales taxes in particular) and perhaps even convince voters to approve the income tax that Florida currently lacks.  By sharply limiting the states’ biggest source of revenue, the new tax caps might require Florida to seek some type of bankruptcy-like protection following a major storm.

Together, these two measures—property insurance socialism combined with tax caps—reveal a split-personality populist governing style. Crist has literally mortgaged his state with two short-sighted measures that have nothing in common besides their ability to attract votes. It’s not a good record to run on. Charlie Crist simply isn’t fit to serve in the Senate.

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18 Comments so far ↓

  • ltoro1

    It’s about time someone here figured this out.

  • balconesfault

    Huh – passing popular new spending programs while capping rise in property tax revenues? It sounds like Crist singlehandedly did for Florida what it took the referendum process to accomplish for California.

  • theCardinal

    thank you for FINALLY speaking the truth about Crist. Why do you think he wants for Senate so bad. It is not a question of when the system will break in Florida but when. The most irresponsible Governor in my memory. The crazy thing is that these “reforms” are what Crist is most popular for.

  • TerryF98

    Another fiscal conservative proving the point that they just are not.

  • sinz54

    Bailing out homeowners for hurricanes (which are not rare but probable every single year) amounts to–welfare for homeowners. You might as well write each homeowner a check each year.

    Hey, maybe here in MA where I live, Governor Patrick should propose bailing out each homeowner for every major snowstorm? When there’s a heavy blizzard, I can’t get to my dialysis center for treatment and that is extremely serious for my health. Maybe I should request a bailout?

    This is stupid. In this vast country, you choose where to live after having evaluated the benefits and risks of each area. If you are going to live in an area where hurricanes are frequent, you agree to take the risk and the loss if it happens.

    In Florida, hurricanes are frequent.
    In Massachusetts and northern New England, snowstorms are frequent.
    You take the risk and incur the loss, if you choose to live there.

  • balconesfault

    Bailing out homeowners for hurricanes (which are not rare but probable every single year) amounts to–welfare for homeowners.

    In reality – it’s welfare for developers and land speculators and mortgage lenders. Homeowners themselves are not the ones who profit from creating huge development tracts in places where it’s stupid for people to live in high density. Meanwhile, homeowners won’t buy if they can’t get loans.

    The state taking on the risk means that lenders can rest assured that they won’t see their assets (the houses they hold the paper for) blown away by a storm. When they have this assurance, they lend money, and developers have customers for the homes they build in high risk areas. As developers look for more land to develop, speculators who purchased high risk land at low prices reap a windfall.

    As with the mortgage collapse, this isn’t about the homeowners … it’s about the people who reap billions of dollars up and down the supply chain.

  • franco 2

    I’m not sure “Crist” and “populist” should occupy the same sentence. Tax cuts are popular but the people know when they are being pandered to – at least conservatives do, which is why Crist is losing so badly. They don’t trust him.

  • Independent

    E Lehrer writes: “… two short-sighted measures that have nothing in common besides their ability to attract votes. It’s not a good record to run on. Charlie Crist simply isn’t fit to serve in the Senate.”

    Oh to the contrary… with that record he would be a perfect fit with many in the US Senate today. In fact, he’d be more successful than most US Senators now serving… at least he’s gotten those 2 voter attracting measures passed… most US Senators haven’t done that much by the end of 3 terms.

    Look, I’m not a big fan of Crist’s… but he’s a perfect fit for the US Senate –ego centric, preening, self-serving, career political animal with tailored suit jackets and a slick smile.

    Perfect. He’ll fit in very well if he makes it, thank you.

  • Rob_654

    “Bailing out homeowners for hurricanes (which are not rare but probable every single year) amounts to–welfare for homeowners. ”

    The next time a hurricane hits Florida – I can’t wait for the Tea Party folks and Far Right Republicans in Florida to start marching and protesting *against* receiving Federal Funds to help them rebuild.

  • JonF

    I take it Mr Lehrer does not live in Florida, (I did: 2003-2008) as there are several glaring errors in this piece. Most significantly: Citizens Property Insurance was NOT created by Charlie Crist. It dates back to the early 90s and the aftermath of Hurricane Andrew when property insurers changed how they do business in ths state, much to the vast detriment of its citizens and businesses. The state was forced to create public insurance because insurers were flat out refusing to issue policies to many people at any price. Flash forward to 2004-05. After two years in wich eight hurricanes struck or grazed Florida, there began a round of rate increases which made insurance simply unaffordable for many people– and not just homewoners, but virtually any sort of property owner. Businesses, hospitals, churches, schools– everything was affected. For example, my church’s premium went from 9K a year to 35K. And it was NOT beachfront property, but sits six miles inland, and not in any sort of evacuation zone. You know the saying that an unsustainable trend won’t be sustained? Well, that’s what happened. Public outcry was huge, and it cut across the ideological spectrum, and across all interest groups. If Ayn Rand had been elected governor in 2006 she would have had to come down like a ton of bricks on the insurers as her first act in office. And if you study the details of the deal Crist with the insurers you can only conclude that his main fault was in being too naive: he actually thought the companies would keep their word. Instead they broke their side of the bargain almost as soon as the ink was dry. So yes, Crist looks played the fool, but not for the reasons cited in this post

  • ltoro1

    balconesfault, yeah it’s wefare for them too. JonF, I do not think Lehrer was suggesting Citezens was a creation of Charlie Crist. Whoever invented it, thanks to Crist the State of Florida is one bad hurricane season away from a disaster.

  • mpolito

    It’s good to see that the folks at this site are letting go of Charlie Crist. It should be pretty clear by now that they backed the wrong horse.

  • JonF

    Re: thanks to Crist the State of Florida is one bad hurricane season away from a disaster.

    Florida, along with the entire Gulf and entire East Coast, is always one hurricane season away from disaster. Hurricanes, by definition, are disasters.
    The solution (on the insurance front) is not Crist’s, but it also lies outside his power. What is needed is a truly national reinsurance fund to cover major national disasters– which can of course strike anywhere, not just Florida.
    I am no fan, by the way, of people building on beaches or alongside rivers and bayous. In fact, IMO, we should not provide flood insurance for new construction in such areas, period. The New Oreleans Ninth Ward should never have been built on. When I lived in Florida my No 1 criterion for finding a place to live was that it had to be outside a flooding evacuation zone. But one thing people who are not in Florida may not appreciate is that the extreme insurance practices affected not just people who built in ridculous places, but people throughout the entire state, including those miles away from the coast.

  • jonro

    Lehrer’s analysis of the Save Our Homes program is lacking. The program was started years ago because senior citizens were being forced out of their homes because of escalating property taxes. Before this financial crisis started, property taxes escalated out of control as property values became overly inflated during the housing bubble. About 3 years ago, I thought about moving to a house worth about the same as my house, just down the street from me. I had only owned my home for 3 years, but it would have cost me nearly $1,000 additional in property taxes per month to move! This situation resulted in people who were “stuck.” They couldn’t afford to move into even a smaller home and pay a lot more. Older people who wanted to downsize, couldn’t, and younger families couldn’t upsize. Portability means that you won’t be penalized for moving and reintroduces mobility into the real estate market. It makes a lot of sense. Consider this, the Save Our Homes initiative protects homeowners against wild fluctuations in property values. The property taxes can increase up to 3% per year on these homes, accounting for inflation.

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