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Falling property values to cut into money for schools, adds to doubts on Crist's budget

TALLAHASSEE — Florida's property values are crashing so precipitously that schools statewide will likely collect nearly $1 billion less next year, according to new economic forecasts.

The 12 percent — or $219 billion — property-value decrease is expected to wipe out Gov. Charlie Crist's proposal to increase per-student spending. And it casts more doubt on the financial assumptions underpinning his budget proposal, which was partly based on more optimistic tax collections.

Thursday's forecast also increases the pressure on lawmakers to consider general tax increases as well as taking the federal stimulus cash Crist plowed into his budget.

Without the federal money, they would have to raise property tax rates or make politically unpopular cuts to schools. With it, they can fill most of the hole left by the reduction in property values.

The new figures were released on the day legislators started to closely examine Crist's $66.5 billion budget plan. Crist on Thursday denied that he overestimated the soundness of his spending plan.

"I don't think it's oversold. It's pragmatic and reasonable and it's the right thing to do," Crist told reporters. He called his budget proposal "a wonderful road map."

But in multiple committees in both chambers, Crist's budget proposal was met with disappointment that crossed party lines. More than one Republican said Crist should to submit a new budget.

Three Republican senators said they would be willing to consider tax increases, but they need Crist to tell them what revenue increases he would accept.

Ormond Beach Republican Sen. Evelyn Lynn cut short a presentation by one of Crist's budget analysts, saying: "If you can get that message back (about revenue increases) I think that's more important than hearing the whole ball of wax."

Lawmakers expect even greater losses March 13, when state economists will issue a tax-collection forecast on the state's general-fund budget. They complained that Crist's budget was propped up by too much stimulus money, about $4.7 billion.

"It seems like conjecture … what we hope we'll be getting," said Rep. Gwyn Clarke-Reed, D-Deerfield Beach.

State economists expect property values to sag 12.6 and 11.8, respectively, in Pinellas and Hillsborough counties next year. In Hernando and Pasco counties, they're expected to drop by 8.2 and 7.8 percent, respectively.

The new state property-tax estimates don't specify the impact on Florida counties and cities.

Local governments rely on property taxes, don't have access to as many stimulus dollars and will face a far tougher time grappling with the loss. Their revenues were already trimmed by 9 percent due to the Crist-backed Amendment 1 property-tax cut plan approved in January 2008 by voters. Now, Crist is pushing even more tax cuts.

"It's pretty grim for counties," said Cragin Mosteller, a lobbyist with the Florida Association of Counties. "If they want quality of life and critical services, citizens have to decide what services they want."

Senate budget chief J.D. Alexander of Winter Haven said the Senate is leaning toward using the stimulus money — a total of about $3.6 billion for schools over three years.

But lawmakers are worried that if they take the stimulus money, they'll artificially inflate the budget with federal money that will run out in three years. Once the money runs out, legislators might face a huge deficit for schools.

Crist has repeatedly boasted that the federal stimulus money would enable the state to forgo tax increases, spend more on Medicaid and increase per-student spending by $184.

Now, school spending might remain flat. The reason it won't decline significantly: the $880 million in federal money Crist pumped into the state's school-funding formula portion of the budget. That was enough to make up a $440 million property-tax decline — but not $1 billion.

Crist's budget chief, Jerry McDaniel, said the state could still increase per-student spending, but legislators would have to use even more stimulus money next budget year, which begins July 1. Crist's budget avoided general tax increases, but McDaniel acknowledged Thursday that lawmakers should consider them.

Jacksonville Sen. Steve Wise worried that Crist's budget numbers could be even more off because there's a chance he underestimated the number of children who will attend public school if their private schools close.

Echoing an increasingly frequent criticism from lawmakers, Wise said the governor's rosy budget proposal got parents' and school boards' "hopes way up." But with the new financial numbers, legislators will take the blame.

"Then we become the bad guys in this game," he said.

Miami Herald staff writer Kathleen McGrory and Herald/Times staff writers David DeCamp and Amy Hollyfield contributed to this report. Marc Caputo can be reached at [email protected]

Falling property values to cut into money for schools, adds to doubts on Crist's budget 03/05/09 [Last modified: Thursday, March 5, 2009 9:30pm]
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