Crist wants to raid $740 million from trust funds to balance budget

Feb 28, 2008

South Florida Sun-Sentinel–Feb. 28, 2008

Money paid into trust funds for specific purposes ranging from enforcing condo laws to providing affordable housing would be diverted to routine government expenses under terms of Gov. Charlie Crist’s proposed $70 billion state budget.

With the state’s economy weakened and government revenue down, Crist has proposed balancing his spending plan by using money from 39 trust funds — accounts created by the state as trusts to be used for specific purposes. The budget Crist submitted to the Legislature on Jan. 31 for the year beginning July 1 would take $740 million from trust funds.

Condo leaders are strongly opposing Crist’s proposal to raid the condo trust fund. Most of the money came from condo unit owners.

"It shows that embezzlement of association funds is not only taking place in our condos," said Jan Bergemann, president of the Deland-based Cyber Citizens for Justice. "Even the government participates."

This is the second time Crist has proposed using the trust funds to help balance the state budget. State senators, who consider trust funds untouchable, balked at a similar proposal in September and condo leaders were especially forceful in their opposition. Crist never submitted that proposal.

State Rep. Julio Robaina, R-Miami, chairman of the House Select Committee on Condominium & Homeowner Association Governance, opposed the earlier proposal and disagrees with Crist again on the new one. Since Jan. 26, his seven-member committee has held public hearings throughout the state to hear complaints about associations, determine the problems and recommend new laws.

"I think it would be a real shame to [divert money in] a trust fund, seeing all the problems we’re hearing from people around the state," he said Wednesday. "Those dollars could be used to help them out."

The Select Committee is scheduled to hold its final hearing in Tallahassee on Monday and issue its report and recommendations that day, just in time for the annual 60-day legislative session that begins Tuesday. The Legislature must pass a budget within those 60 days.

Erin Isaac, Crist’s communications director, would not comment on the governor’s proposal.

Legislators created the condo trust fund, administrated by the Department of Business and Professional Regulation, to accumulate money from condo owners and developers to pay for condo regulation without using money from other taxpayers.

Money comes from the $4 annual fee paid by each of the 1.4 million condo owners in the state. The 25,006 condo associations funnel the money to the department. Money also comes from fees paid by developers as they create condos and from the fines and civil penalties associations that violate state law pay the department.

State officials use the money to investigate complaints, enforce condo laws, educate owners and pay the state condo ombudsman.

According to the budget proposal, the condo fund on July 1 is expected to contain $33.1 million. Crist’s budget would take out $20 million for general state spending. On July 1, 2009, as money continuously goes back into the fund, it should have more than $20 million, his budget anticipates.

Money from the trust funds that Crist wants to divert is in a category generally known as "undesignated surplus" or "undesignated balance." Because it isn’t earmarked for any particular use in each fund, spending it for other purposes can’t hurt existing programs.

Every state government unit must decide to make up for reduced revenue by dipping into the undesignated funds, raising taxes or cutting services.

Robaina said he questions how the state allowed the trust fund to accumulate so much money that the governor could propose taking $20 million without hurting existing programs.

"The money left in that trust fund should have been used to provide programs that could have lowered the number of complaints about associations," he said.

Peter Cavanagh, the 45-year-old president of a condo association in the Kings Point complex west of Delray Beach, also doesn’t want the money diverted. He cited the House Selection Committee hearings he has attended.

"I’ve heard all the problems and for the state now to decide to take the money is a bad idea," he said. "It could be used for education of board members and other purposes and shouldn’t be allowed."