Crist can tap $1.7 billion from emergency funds if need arises
Published: Tuesday, April 1, 2008 at 6:01 a.m.
Last Modified: Monday, March 31, 2008 at 11:12 p.m.
TALLAHASSEE - Signaling the depth of the state's financial problems, House leaders said Monday they want to give Gov. Charlie Crist the authority to tap about $1.7 billion in emergency funds if the budget crisis continues after lawmakers leave town in early May.
By the numbers
- Budget passed last spring for 2007-08 budget year: $71.953 billion
Budget after Gov. Charlie Crist's vetoes: $71.868 billion
Budget after a budget-cutting session last fall: $70.831 billion
Budget after more budget cuts last month: $70.360 billion
House proposed budget for 2008-09: $65.1 billion
House budget chairman Rep. Ray Sansom, R-Destin, said the House is prepared to let Crist use about $700 million from the state's Budget Stabilization Fund, a $1.4 billion emergency account originally endorsed by voters in 1992. It would mark the first major use of the fund, which was created to provide a financial cushion for the state in the time of an emergency.
The House will also let Crist use $1 billion from the Lawton Chiles Endowment Fund, which is a $2.4 billion account set up after the former governor won a $13 billion settlement from the tobacco companies. If used, this would be the first time the state has spent the endowment's principle. The fund was created so that only its interest would be used to fund health care and child-welfare programs.
In fact, a few weeks ago, as Democrats and others clamored for legislative leaders to tap the budget stabilization and Chiles' funds to fill holes in the budget, Sansom warned that it should be one of the last steps lawmakers take.
"Spending the Chiles' endowment dollars would mean spending the principle of the long-term savings for our children and seniors, a practice that should be guarded against closely,'' he wrote in an op-ed piece he sent to newspapers.
But as the House moves forward on a $65 billion budget - which is 10 percent less than the $72 billion passed by lawmakers last spring - legislative leaders said they remain uncertain about when Florida's economy may begin recovering and begin refilling the state's financial accounts.
In early March, state economists had to trim another $1 billion from this year's revenue estimate - after February's sales tax collection fell $89 million below their original estimate. And preliminary indications are the March collections, despite the adjusted revenue estimate, are still falling short of projections.
Sansom and House Speaker Marco Rubio, R-West Miami, said the House is ready to give Crist the authority to tap the emergency funds if it is necessary through the remainder of this year or in the next budget year, which begins July 1. The Senate would also have to endorse the proposal.
Under the plan, Crist would have the ability to use the funds if the state's basic budget reserve - known as the working capital fund - dips below $200 million, which is roughly its current amount.
"That's a very risky amount of money'' for a $65 billion budget, Sansom said about the $200 million.
If Crist decides to use the emergency funds, the expenditures would be subject to the approval of the Legislative Budget Commission, a special panel of lawmakers that meets periodically to authorize budget adjustments.
Sansom said using the emergency funds is a way, in the event of a further drop in state funds, "to make sure when the invoices come in that we can still pay the bills.''
"We think it is a very reasonable approach,'' he said.
Under state law, lawmakers would have to replenish whatever money they take out of the Budget Stabilization Fund. The money should be paid back within five years.
In a more positive budget development, Rubio said on Monday that the House was backing off its plan to cut funding for dentures, eyeglasses and hearing aids for poor adults covered by the state's Medicaid program. The House has come up with $14 million to cover the state's share of the program, which will be matched with about $18 million in federal funds.
However, the Senate's proposed budget still would eliminate dentures and hearing aids for adults covered by Medicaid.
The House Budget and Policy Council will vote on its budget bill on Thursday. The bill will be on the House floor next week.
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