Budget battle brewing
Published: Sunday, March 1, 2009 at 6:01 a.m.
Last Modified: Saturday, February 28, 2009 at 11:58 p.m.
TALLAHASSEE - Although lawmakers have cut some $7 billion in state spending over the last two years, Gov. Charlie Crist managed to propose a $66.5 billion state budget for next year that contains no major tax increases and boosts spending for education.
As lawmakers open their annual 60-day session on Tuesday, they believe the budget they end up with in early May will be far grimmer than the governor's optimistic forecast, citing a potential budget deficit in excess of $5 billion.
In fact, most lawmakers and lobbyists are predicting money woes will be the dominant theme of the 2009 Legislature.
And the two critical subplots in the money debate will involve how the state uses its share of the federal stimulus money and whether the Legislature may need to embrace a tax increase this year to erase part of the budget deficit.
"It's going to be funding, funding and funding," Mark Pudlow, a spokesman for the Florida Education Association, the teachers' union, said about the session.
And school funding illustrates one of the key financial challenges lawmakers face this spring.
Since 2007, per-student funding in Florida has fallen from more than $7,300 to $6,860. Crist wants to boost it to $7,044.
And he can do that by relying heavily on a good portion of the $12.2 billion in federal stimulus funds the state is expected to receive over the next three years.
In fact, Crist used $4.7 billion of the federal funding to shore up his budget proposal for the budget year that begins July 1, including $880 million for the kindergarten-through-high school system.
Crist, who has drawn Republican ire for praising President Barack Obama's efforts to pass the stimulus plan, is unapologetic about using the federal funds.
"That's an enormous shot in the arm and a shot in the arm and a shot in the arm again," Crist said as he unveiled his budget.
"I don't know how you go home and say well, you know we're getting $12 billion from Washington, and I'm not going to give it to your kid, your school. I'm not going to spend it on your road that's congested."
But Crist and lawmakers already seem to be at odds over how aggressively to use the federal money.
Lawmakers said many questions remain about the funding that may not be cleared up for weeks to come, including whether the state can secure a waiver to use all of the $3.6 billion in education funding earmarked for Florida.
More critically, lawmakers point out that Crist wants to use a lot of one-time federal money for recurring state programs - meaning when the money eventually runs out, the state could be facing major deficits in vital education and health care programs.
"The federal stimulus money is not a bottomless piggy bank," said Senate Democratic leader Al Lawson of Tallahassee.
"Like so many Florida families have already discovered, sooner or later, the money will run out."
House Speaker Larry Cretul, R-Ocala, said the House would take a conservative approach to using the funding, saying that the stimulus money should not obscure the need to balance the state's budget for the future.
"I'm looking at it not for just this immediate year but for three or maybe four years out," said Cretul. "After we leave, there will be others who will come to deal with our actions."
Lawmakers will have a lot of leverage over using the stimulus funds, since it will take a three-fifths vote of the House and Senate to endorse using a large share of the one-time money in the state budget.
Without the vote, a state constitutional amendment bans the use of more than 3 percent of one-time money in recurring programs, while the governor's funding plan well exceeds that at 12 percent.
Social service lobbyist Karen Woodall, who strongly supports using the federal funding to help programs like Medicaid, said it would be "a travesty" if lawmakers don't allow the limit to be exceeded.
She said the funding is largely aimed at vulnerable Floridians, many of them unemployed, "in a time of great need."
"It's not money in some deep, black hole," Woodall said. "It's actual direct stimulus to the economy both in terms of jobs not eliminated and actual services."
Woodall said the idea is the money can be used to support the state budget until the economy revives and regular state revenue sources, such as the sales tax and real estate transfer taxes, begin to rise again.
Woodall, Lawson and other advocates said one of the opportunities in the current economic crisis is that it should give the state a chance to review its tax structure and perhaps eliminate some tax exemptions or loopholes.
Senate President Jeff Atwater, R-North Palm Beach, said his chamber would take a serious look at several tax proposals, including the elimination of some sales tax exemptions, an increase in the 33.9 cents-a-pack cigarette tax and a tax on Internet sales.
But Atwater also warned that even with potential tax increases and a boost in federal money, lawmakers are still likely to face a major budget deficit.
"There will be more reductions in spending and that will certainly be part of the equation," he said.
House leaders appear to be more in line with Crist, who has distanced himself from any suggestions of a tax hike.
Cretul said that while the House will take a "good, hard look" at ways to raise money to pay for the state's programs, he said that "we are a ways away from suggesting any new revenue streams."
Other revenue options remain on the table for lawmakers.
Crist will seek legislative approval for his plan to let the Seminole Tribe expand its casino games. Approval of the pact could bring $288 million to the new budget and payments in excess of $100 million for future years.
But the deal is likely to be complicated by demands from existing horse and dog tracks and jai alai frontons that they be allowed to expand their gambling operations and receive tax breaks to offset the advantage of their Seminole competitors.
Major fee increases are also likely to be considered.
Crist outlined more than $500 million in fee increases, including a proposal to let state universities raise their tuition by as much as 15 percent a year until the schools reach the national average for public college tuition.
He also recommended increases in vehicle registration and driver's license fees, civil court filing fees, fines for overweight trucks and a 6 cents-per-gallon fee on bottled water plants.
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