Legislators Open Session With Mandate To Cut Budget
Mar 4, 2008
Tampa Tribune--Feb. 29, 2008
By Catherine Dolinski of The Tampa Tribune
TALLAHASSEE – State leaders this legislative session will grapple with the worst budget crunch that Florida has seen since the early 1990s. The reason is no secret: Florida, which depends heavily on tourism and real estate sales, is suffering the effects of the country’s deteriorating economy.
Consumers have pared back spending, and after experiencing runaway growth in property values, some of Florida’s housing markets are among the worst in the country. Revenue from sales and real estate transaction taxes have plummeted below the minimum that Florida needs to maintain its budget.
Bottom line: Analysts predicted in November that state revenue would come up short this fiscal year and next by $2.5 billion, despite $1.2 billion in budget cuts that lawmakers made in October.
Lawmakers are sharpening their budget shears — but before they start hacking away at next year’s spending, they will carve once more into what remains of this year’s $70.8 billion budget. House and Senate leaders have identified more than $500 million in cuts for this year.
"We are not going to shift the burden to businesses, and we are not going to shift the burden to taxpayers," House Speaker Marco Rubio said. "We are going to make the difficult decisions."
Budget cuts won’t be the only matter of business this session, which starts Tuesday and ends May 2. Senate President Ken Pruitt wants to build more roads and let voters choose the state’s education commissioner. Rubio wants more tax relief. Gov. Charlie Crist wants to spend $200 million to stimulate development of renewable and alternative energy technology. Property insurance reform, education initiatives and health care projects will compete for lawmakers’ support, too.
But with the House and Senate busy digging Florida out of its financial hole, any proposals that carry a price tag will be a tough sell.
Making Ends Meet
To keep the state’s agencies and programs operating at status-quo levels next year, lawmakers say they would need $29 billion. But projected revenue for fiscal year 2008-09 is only $26.5 billion, and that could shrink more this spring with updated projections.
Crist’s budget proposal reduces next year’s spending by $869 million but also dips heavily into state reserves. Specifically, he aims to spend $1.1 billion in reserves, mostly from state trust funds dedicated to needs such as affordable housing, state workers’ compensation insurance and health care.
"We have reserves in our treasury for exactly this purpose — to be utilized when the need arises," Crist said. "We are in a historic situation where, for two years in a row now, we have less revenue coming into the state treasury."
Crist’s plan to tap state reserves would require a supermajority vote in the House and Senate. But fiscally conservative lawmakers, particularly those in the House, have lambasted the governor’s approach.
"No one believes, no economist in the world has told us, no one watching monthly indicators has told us that next year will be so much better than this year that we can afford to spend that money," Rubio said. "It’s bad public policy, and I don’t want to be a part of that."
Rubio and his lieutenants have also scorned a major revenue source in Crist’s budget: gambling. Crist is relying on $250 million in new revenue from an enhanced lottery game as well as the state’s $27 million cut of profit from slot machines in South Florida. He has also signed a gaming compact with the Seminole Indians that would yield $130 million for the state next year.
Rubio, who is suing the governor over the gaming compact, opposes the expansion of gambling. He has characterized Crist’s reliance on it as an attempt "to balance the budget on the backs of the poor."
First Things First
The Legislature plans to cut up to $542 million from the current budget, more than half of which would come from education. Other areas facing hits include courts, prisons and health care.
"Ultimately, we either have the money or we don’t. People can either afford it or they cannot," Rubio said.
House Minority Leader Dan Gelber called the proposed cuts shortsighted. "I think the last thing you cut when times are tough is your education," he said. "Why aren’t we going after things like corporate tax giveaways first?"
Gelber wants the state to raise revenue by closing corporate tax loopholes, and he agrees with Crist on dipping into state reserves in lieu of making heavy cuts to education.
Crist has staked his credibility on state support for K-12 education, having persuaded voters in January to pass a property tax cut on faith that it would not harm schools. The governor has proposed boosting K-12 spending in 2008-09 by $1 billion, though lawmakers have all but called that impossible.
"I am committed to holding education harmless from the effects of Amendment 1," said Joe Pickens, R-Palatka, chairman of the House Schools and Learning Council. "It is not possible to hold education harmless from the effects of our economy."
The state can save $600 million in the 2008-09 education budget by delaying full implementation of the class-size amendment for another year, said Sen. Don Gaetz, R-Fort Walton Beach, chairman of the pre-K-12 education committee.
Beyond The Budget
Although Pruitt said he is not seeking more property tax relief, Rubio is pushing several tax-cutting measures. Among them: caps on revenue growth for state and local governments, which Crist supports.
"The exuberance of a runaway real estate market led to enormous increases in sales tax revenues that were unsustainable," Rubio said. "Both the state government and the local governments spent more money in the short term than we should have. … The key is to limit the growth of government spending to an index that’s reliable, that’s predictable, so that we are never in this position again."
Rubio also wants an $8 billion tax cut that would cap property taxes at 1.35 percent of a property’s assessed value. The concept lacks Senate support, but Senate Finance and Tax Committee Chairman Mike Haridopolos, R-Melbourne, has said his panel would hear the proposal.
Pruitt’s priorities include building more roads and schools and legislating more protections for the elderly against financial predators. He also wants to make the position of education commissioner an elected Cabinet office.
The appointed post now is filled by the governor-appointed Board of Education. Pruitt’s plan would also strip the Board of Governors, which oversees state universities and colleges, of many powers and reduce its membership from 14 to five.
Pickens said the House will "partner with the Senate" on such a proposal, which, if passed, would appear on November’s ballot.
Crist, meanwhile, wants to address Florida’s high rate of people without health insurance. He has proposed allowing insurance companies to offer policies with limited benefits. He would also launch a $64 million pilot program that would steer the uninsured toward affordable primary-care providers, instead of high-cost emergency rooms.
Hillsborough County legislators are seeking $91 million in state tax money for community projects such as park improvements, anticrime programs and historic renovations. Local bills would help babies with fetal alcohol spectrum disorder and ease ex-convicts’ re-entry into society. Other bills would fund drug rehabilitation programs and efforts to reduce juvenile crime.
The most expensive local bill, $25 million, is sponsored by Rep. Bill Galvano, R-Bradenton, and would finance the West-Central Florida Water Restoration Project, which seeks to reduce groundwater pumping over 5,100 square miles in eight counties.
The second-largest request, $12 million, is in a bill sponsored by Sen. Victor Crist, R-Tampa. The money would fund expansion of water treatment capacity by 25 million gallons per day. The water would come from the Hillsborough and Alafia rivers, the Tampa Bypass Canal, and the C.W. Bill Young Reservoir.
Rep. Kevin Ambler, R-Lutz, is sponsoring perhaps the most controversial Hillsborough bill. Ambler’s legislation would boost the membership of the City-County Planning Commission to 11, adding another member chosen by the county commission. The bill would also replace one Tampa member on the Tampa Sports Authority with a county member.
Tampa would gain two seats and Temple Terrace and Plant City would each gain one seat on the Environmental Protection Commission under Ambler’s bill. The EPC is now made up of the seven county commissioners with no city representation.
The city is closely monitoring two bills that could affect Community Redevelopment Areas.
One bill, sponsored by Rep. Michael Scionti, D-Tampa, and Sen. Mike Fasano, R-New Port Richey, would allow local governments to use property tax money generated in CRAs to help pay for law enforcement, fire rescue or emergency medical services within the districts.
If passed, the provision could take some pressure off the rest of the city’s budget, much of which is spent on police and fire services. On the other hand, if CRAs spend some of their budgets on emergency services, other projects — such as infrastructure improvements — could be left unfunded.
Sen. Ronda Storms, R-Brandon, is sponsoring another measure that would dissolve all newly created CRAs within 15 years of creation. CRAs that have existed more than 15 years would be dissolved by July 1, 2009. That means the two downtown CRAs and one of the two in Ybor City would expire.
"It would crush all of our CRAs," said Mark Huey, the city’s economic development administrator.
Besides monitoring CRA legislation, Tampa has requested $3 million from the Legislature: $1.5 million for stormwater improvements in Drew Park and $1.5 million for stormwater improvements in North Tampa. Tampa is not asking for Riverwalk money this year.
Environmentalists hope to secure money to buy conservation lands and prevent utility lines from scarring those preserved areas.
As they have in previous tight budget years, environmental groups will try to protect the annual $300 million appropriation for the Florida Forever trust fund that is used to buy environmentally important acreage so it can be preserved.
Environmental groups also are uniting in an effort to block legislation sought by Progress Energy that would let the utility take public lands to build transmission lines. The legislation would also let Progress take other lands through a streamlined eminent domain process.
Presidents at the state’s 11 public universities know grim times are ahead.
Crist has recommended a $52 million increase in a recurring pot of money universities use to pay for salaries and programs. Universities question whether the Legislature will find that money, however.
The state university system anticipates having to cut an additional $49 million this fiscal year, and worse times are expected next year. Universities cut nearly $83 million in recurring money last fall.
"We’re confronted with the reality that this coming year’s budget by all accounts is going to be significantly reduced beyond anyone’s expectations," state university system Chancellor Mark Rosenberg said.
Even private universities will be watching the Legislature closely. Crist proposed cutting $3,000 per student in state grants to freshmen and other new students attending private colleges next year.