Fla. lawmakers work on $2.3B budget deficit


Published: Monday, January 5, 2009 at 3:09 p.m.
Last Modified: Monday, January 5, 2009 at 3:09 p.m.

TALLAHASSEE, Fla. -- Lawmakers will have to make deeper spending cuts than anticipated because December tax collections fell $100 million below forecast, Senate President Jeff Atwater said as the Legislature convened Monday in special session to confront a growing budget deficit.

If the December trend continues through June 30, when the budget year ends, Florida could be another $600 million to $700 million in the hole, said Atwater, R-North Palm Beach.

During the special session, the Republican-controlled Legislature is looking at a combination of options including spending cuts, reserves, and higher court fees and fines to close at least a $2.3 billion budget deficit.

Tax increases, though, are off the table for the special session. The House by a voice vote killed any consideration of Democratic proposals to raise Florida's cigarette tax, now one of the lowest in the nation, and close loopholes in the documentary stamp tax levied on real estate transactions.

Atwater, however, directed Senate committees to review potential new revenues for consideration in March when the regular session begins.

"I would tell you, standing here with you today, cigarette taxes is going to be a part of this, but I'd much rather look at that in the totality of what are the other reforms that might be necessary," Atwater said.

Senators also will review sales tax exemptions to see if any can be repealed and consider legislation to help collect sales tax owed on mail order and Internet sales, although full compliance would take an act of Congress.

Senate Democratic Leader Al Lawson of Tallahassee urged lawmakers to consider closing loopholes that allow national and international corporations to avoid Florida taxes.

"We need to make some of these corporations pay just like the regular citizens are paying," Lawson said.

Gov. Charlie Crist had proposed about $550 million in spending cuts, but lawmakers are figuring on nearly $1 billion in reductions, Atwater said.

That's partly because of the growing tax shortfall and lawmakers' refusal to consider the governor's proposed $135 million revenue increase from an expansion of Seminole Indian gambling during the special session, although they may take it up in March.

Senate Ways and Means Chairman JD Alexander, R-Winter Haven, said the governor's idea of borrowing $300 million to build prisons to free up money currently budgeted for that purpose for other uses also probably won't be accepted.

Lawmakers, though, likely will agree with Crist's proposal to borrow money from the Lawton Chiles Endowment. It invests proceeds from Florida's multibillion-dollar settlement with the tobacco industry for future use on health care programs for children and the elderly.

"We're going to have to tap it," Atwater said.

He wasn't sure yet how much would be taken out of the endowment named for the late governor who led efforts to sue the tobacco industry.

Crist has proposed taking $600 million from the $1 billion endowment. That's about half of what its value was six months ago due to market losses and withdrawals for other current year spending.

Chiles' family has threatened to sue to stop any attempt to take more money from the endowment.

A starting point for spending cuts will be a 4 percent holdback Crist ordered even before the budget went into effect in July. Atwater said nothing will be spared, including health and human services, even though the state risks losing federal matching money.

"Proportionately we're going to try to do everything we can to be as light as possible there," Atwater said. "But there is no way that we can hold it harmless."

Lawmakers will face even more financial woe when they tackle next year's budget during the regular session.

Rising costs and more revenue shortfalls are expected to create a budget gap of about $4 billion next year that could result in fewer health benefits for the poor and more overcrowding in the state prison system. There's also increasing demand for Medicaid, unemployment benefits and food stamps, which nearly one in 10 Floridians receive.

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