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Stimulus stirs the pot as hard budget choices await Florida lawmakers

TALLAHASSEE

With taxes or fees likely to rise and some state services facing the ax, this is a year lawmakers will have little to brag about.

That's especially true for Republicans, who have controlled the state's power structure for a decade. Their relationship with their governor, Charlie Crist, and their core beliefs about government spending are being challenged like never before because of the lure of the cash from Washington.

There are a few minor bright spots as lawmakers start their annual two-month session Tuesday. School property taxes could be cut. School spending could increase. So could unemployment benefits and health care for the needy.

But that's only if legislators abide by Crist's call to spend about $7.9 billion in federal stimulus money this budget year and next, with the balance of the money, $4.3 billion, exhausted by 2011.

Crist portrays the federal aid as a panacea that would allow the state to avoid deep budget cuts, afford some property-tax cuts and increase spending.

"It's a whole new world," Crist said. "We're in an economic crisis. We need this money to get us to a bridge to a better future. And I believe that by the time those three years pass we will be on the rebound."

But three years of record job losses, plummeting tax collections and a flat-lined housing market mean legislators don't all share Crist's optimism.

"The governor has a very positive outlook and I mean that with all due respect," said Republican Senate President Jeff Atwater. "We don't have a crystal ball. We don't know how deep this (bad economy) is going to go. We don't know how long this is going to last."

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The stimulus money leaves Republicans in a difficult position. If they spend the money, they look like they're siding with and acting like Democrats; if they refuse the cash, they'll have to make deep budget cuts that will be tough to explain to constituents.

Lawmakers will take the money if Crist has anything to do with it. He remains popular, even as the economy worsens.

Moderates in the Senate say they have little choice but to take the stimulus cash. They face an estimated deficit of about $5.5 billion. Without stimulus money flowing to education, they might have to raise the statewide school property tax rate because property values are bottoming out. If they take the money, property taxpayers could avoid a rate hike for an estimated savings of $356 million to $1 billion statewide.

Senators and some House Republicans also say this is the session to eliminate some sales tax exemptions, approve Crist's gaming agreement with the Seminole Tribe of Florida to raise $288 million and consider upping the cigarette tax, the third lowest in the nation.

Hard-core conservatives, mostly in the House, are reflexively against tax increases and the gaming agreement. And they're making noise that they might reject the federal money.

Budget aside, Crist will have to fend off fellow Republicans on other fronts.

The insurance overhaul he pushed in 2007 that increased government involvement in the marketplace is starting to haunt the state now that State Farm plans to get out of Florida's windstorm business. That will further burden state-run Citizens Property Insurance, which already lacks the cash to handle a catastrophic hurricane.

Legislators have filed bills to increase rates to avoid a possible tax increase to pay for damages from a large storm.

Republican lawmakers in the House and Senate also are trying to halt Crist's Everglades plan that many bash as a bailout of U.S. Sugar. And there's widespread talk of ending the Florida Forever environmental land-buying program that Crist unexpectedly spared from cuts during a January budget-cutting session.

• • •

Legislators fret that Crist's $66.5 billion budget proposal for next year is based on rosy financial assumptions that will likely be disproved when state economists meet March 13 to estimate state revenues.

Also of concern in Crist's budget: Of the government expenses that occur annually, 12 percent would be paid for through one-time money sources, such as the stimulus package.

The state Constitution requires a supermajority vote of the Legislature if more than 3 percent of recurring expenses are funded from one-time money sources.

Legislators worry about expanding government programs — especially Medicaid — with money that would disappear in three years, leaving the state with large entitlement programs and less money.

"It's like someone gave you a Mercedes and said they made a few down payments. Now the rest is up to you," said Punta Gorda Republican Rep. Paige Kreegel.

Atwater and acting House Speaker Larry Cretul say they're also unsure what strings might be attached to the hastily passed stimulus package.

The package seeks to ensure that legislators don't cut programs that already receive federal money. So to get the bulk of the cash, Florida has to maintain relatively high levels of spending for health care, schools and transportation.

Even if the Legislature starts using the federal money July 1, legislative analysts say the state could still have a $2 billion hole in the general revenue portion of the budget.

Lawmakers won't have an easy time filling that gap by making more cuts. Nearly 78 percent of the general revenue budget goes for schools and health care — and lawmakers probably can't cut that if they take the stimulus money. The next largest section of the budget — criminal justice — is also tough to slash as the crime rate increases and the inmate population swells to 100,000.

If those three areas aren't touched, lawmakers could be left with a pool of $1.1 billion — and $2 billion in cuts needed. The state has virtually no savings left and analysts estimate that there's little left in special accounts called trust funds.

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Republican Sen. Evelyn Lynn of Ormond Beach says taking the stimulus money has practical and political pitfalls. But, judging from the stream of constituents asking for help, she concluded that not taking it could be worse.

"When you get people who don't have a place to live, don't have food and have major problems, you begin to see things that maybe others don't see," she said. "It is a risky plan and there may be consequences down the road, but you just can't turn the money away."

Times/Herald staff writers Mary Ellen Klas and Steve Bousquet contributed to this report. Marc Caputo can be reached at mcaputo@MiamiHerald.com

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Stimulus stirs the pot as hard budget choices await Florida lawmakers 03/01/09 [Last modified: Tuesday, March 3, 2009 10:19am]

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