Don’t raid state funds to help budget, Chief Financial Officer Alex Sink tells lawmakers
Nov 13, 2008
Orlando Sentinel–November 13, 2008
Florida’s billion-dollar cash crunch has so far prompted a collective shrug from Gov. Charlie Crist and Republican legislators, who hope short-term borrowing will help them escape the year without deeper budget cuts.
But the main piggy bank that state leaders had been relying on to get through a worsening fiscal year is heading in the same direction as American workers’ 401(k) retirement accounts.
The Legislature last spring gave Crist the power to plug holes in the budget by taking up to $1.6 billion from Florida’s budget-stabilization fund and from the Lawton Chiles Endowment Fund, which was set up with proceeds from the state’s 1997 tobacco settlement.
But Chief Financial Officer Alex Sink says the Chiles fund, intended to help pay for health care, cannot withstand another raid from the governor and Legislature, who are looking at a budget deficit that could exceed $2 billion after state economists release new projections next week.
Sink, a Democrat, said Wednesday that the balance of the investments in the Chiles fund is dropping like a rock, even as the state’s cash crunch increases.
“You can’t just go over there and say, ‘Just give us $1 billion,’ ” Sink told a news conference she called before sending letters outlining the problem to the governor and lawmakers.
“In effect, we wouldn’t have a Lawton Chiles fund anymore.”
The Chiles fund has plummeted in value from about $2.1 billion last summer to $1.46 billion this week, in part because the state has already borrowed about $118 million from it.
But the rest is because the fund’s fixed-income and equity investments have fallen in value by about $547 million, much like 401(k) accounts in the worsening stock market.
Disbursements already approved by the Legislature would cut the balance to less than $1.2 billion by the end of this fiscal year on June 30, 2009, Sink’s office reported.
Sink said that makes it even more urgent for lawmakers to start making tough decisions on where to cut now — earlier in the July-through-June fiscal year, when they might have more options — rather than waiting until the regular legislative session starts in March.
“I think they need to look at the functions that are truly mission-critical to state government,” she said, adding, “This is not rocket science.”
But Tallahassee is in the post-election doldrums right now.
Crist was busy talking national politics at the Republican Governors Conference in Miami on Wednesday.
“I don’t think we need to have a special session in order to spend money wisely,” Crist said in an interview. “I don’t see why spending $40,000 a day on a special session will make us smarter. The only caveat I’ve had is we have to see what the estimators come out with November 21. Fortunately, we’ve got some great reserves in this state that should see us through.”
In the Legislature, new presiding officers in both chambers have yet to name their budget-committee chairs, let alone subcommittee chairs and other members.
Senate President-designate Jeff Atwater, R- North Palm Beach, did not respond to a request for comment.
But incoming House Speaker Ray Sansom, R-Destin, told about 40 rookie lawmakers in an orientation session Wednesday that they could be confronting “one of the most challenging budgets that we have seen in recent memory” when they officially take office next week.
Before deciding his next move, Sansom said, he wants to wait until the state economists issue a new revenue forecast and announce how much lower they expect sales and other tax collections to drop this year.
“When we know the picture [after the revenue conference], we’ll see what might be necessary,” Sansom said. “We’ll just make some decisions from there.”