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Florida's budget gap surges to $2.3-billion

TALLAHASSEE — As the economy tanks, Florida legislators learned Wednesday that the state's budget deficit has ballooned to $2.3-billion — a $150-million increase in just a matter of weeks due mostly to soaring health care costs. The grim financial picture was laid out in detail during a rare pre-session meeting of the full Senate called by Senate President Jeff Atwater, who told the lawmakers that the state is running out of time and money.

Atwater told legislators that they would have to come back next week and prepare for a special lawmaking session soon to figure out ways to balance the budget by cutting spending and raiding savings accounts. He said fee and tax increases will likely be discussed fully in the regular spring legislative session.

Without prompt action, Atwater warned, Florida's bond rating could be downgraded, raising the cost of managing the state's debt by up to $150-million more a year.

"This is not simply another budget exercise," said Atwater, a North Palm Beach Republican. "Throughout the nation, and particularly this state, there has been a tectonic shift in the structural underpinnings of our economy."

Unmentioned in the presentation: State economists' findings last week that statewide property values are forecast to plummet by a total of $266-billion — an 11 percent decrease — next year. Virtually all tax collections are falling, from sales to corporate income taxes.

If property tax rates hold the same next year, that could cost schools a total of $780-million statewide. The potential hit to Hillsborough and Pinellas counties: $23-million and $31-million, respectively. The potential hit to Hernando and Pasco counties: $1.6-million and $6.3-million, respectively.

The deepening deficit all but ensures some type of fee or tax increase soon, and it complicates efforts to provide the basics of government. Up to 147,000 state workers could face two-week furloughs for a savings of up to $300-million. Parts of prison yards are already being converted into tent cities. And advocates are bracing for big cuts to Medicaid, the costly program for poor children, the elderly and the catastrophically sick.

Medicaid rolls are skyrocketing by 100,000 new recipients as the economy worsens, costing the state $146-million more than anticipated this budget year, which ends June 30.

The higher Medicaid costs, reported for the first time Wednesday, are to blame for the widening deficit.

Next budget year, legislators could have to spend $346-million more than anticipated for Medicaid alone.

At the same time, crime is rising and so is the prison population, by about 6 percent yearly.

Florida's top prison official, Walt McNeil, called the decrease in money and increase in crime "disturbing." He said the re-offender rate of ex-inmates is 32 percent, meaning one of every three inmates returns to a Florida prison within three years of release. The population of the Florida prison system will soon cross the 100,000 threshold for the first time.

It stood at 99,584 on Wednesday, precariously close to over-capacity. That could require early release of inmates — something Gov. Charlie Crist pledged to avoid.

So Florida is pitching tents at a dozen low-security prison work camps — most of them in rural North Florida — to house an excess of prisoners. They're also erecting four modular prison wings in northwest Florida.

"We're in the process of putting tents together across our state," McNeil told a Senate committee this week.

It costs about $100-million to build a typical 1,300-bed prison.

Senate analysis shows that even though the inmate population has exploded this decade, and two-thirds of inmates need substance abuse treatment, the number of inmates getting such help has declined, from 10,547 in 2001 to 8,865 by 2006.

McNeil is asking for more money for substance abuse treatment in next year's budget, but he concedes it's a tough sell in such a difficult budget year.

Sen. Victor Crist, the Tampa Republican who oversees the budget's criminal justice section, said Wednesday that the state can't afford to skimp on drug treatment. Crist is proposing early release for some nonviolent offenders into halfway houses or incarcerating some inmates on converted Navy ships.

The state can save only so much by cutting the criminal justice budget. It accounts for just 7 percent of the total state budget of about $66.3-billion. The biggest section of the budget: health care, at 35 percent.

The Republican head of the Senate's health budget committee, Durell Peaden of Crestview, said he expected his budget will be "slashed."

"It's going to be horrible," Peaden said.

Peaden stopped short of endorsing a plan to raise taxes on cigarettes by as much as $1 a pack. The vice chair of his committee, Democratic Sen. Nan Rich of Sunrise, said legislators should consider revenue increases such as the tobacco tax. But budget chairman J.D. Alexander said the Legislature needs to demonstrate that it's wisely spending money before it asks for more.

To make ends meet, Crist is considering more budget cuts, more borrowing, increased fees and merging some agencies, such as combining the Department of Health and the Medicaid program, run by the Agency for Health Care Administration.

"Everybody knows we can be more efficient," Crist said.

Steve Bousquet can be reached at sbousquet@sptimes.com. Marc Caputo can be reached at mcaputo@miamiherald.com

$266-billion

How much statewide property values are forecast to plummet next year

$780-million

How much funding schools statewide could lose next year, if property tax rates hold

$146-million

How much more Medicaid is costing the state than anticipated this year

Option 1

Furlough 147,000 state workers for up to two weeks for a $300-million savings.

Option 3

Empty the Budget Stabilization Fund of $680-million More options, 5A

Option 2

Approve Gov. Charlie Crist's state agency cuts worth up to $500-million

Some remedies being considered

Budget cutting

Options for helping the state's budget deficit:

• Take $1-billion from the Lawton Chiles Endowment Fund, leaving just $200-million

• Drain surplus money in special trust-fund accounts that hold up to $300-million

• Approve Crist's Seminole gambling agreement, which would bring in about $75-million

• Delay construction projects or borrow money for cash projects worth more than $50-million

Florida's budget gap surges to $2.3-billion 12/10/08 [Last modified: Tuesday, December 16, 2008 4:24pm]
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