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House leaders' plan allows easier access to reserve funds

By STEVE BOUSQUET, Tallahassee Bureau Chief
In print: Tuesday, April 1, 2008

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TALLAHASSEE — Amid fears of a deepening recession in an election year, state lawmakers are proposing giving Gov. Charlie Crist and a handful of legislators the power to spend up to $1.7-billion in reserves to avoid a deficit.

The plan being advanced by House Speaker Marco Rubio, R-West Miami, and House budget chief Ray Sansom, R-Destin, underscores the growing worry that Florida's revenue slide will continue.

The proposal, which would need Senate approval, gives the governor and an obscure group of lawmakers unprecedented authority to tap an emergency reserve fund set up after Hurricane Andrew and an endowment set aside for health care programs.

Crist and the Legislative Budget Commission could spend the money in the Budget Stabilization Fund and the Lawton Chiles Endowment if the state's checkbook balance drops below $200-million. Currently, a deficit must be declared — that future spending plans exceed future income — before the Budget Stabilization Fund can be tapped.

"We listened very carefully," said Sansom, noting that Democrats have been pushing for Republicans to use the two funds. "We didn't want to recklessly spend money & but we also realize the economy is in a place where we think this amendment could be very important for us to have in our budget."

The change would prevent lawmakers from having to hold another budget-cutting special session when most of them are campaigning for re-election, and would increase Crist's role in managing the state's bleak finances.

But spending the money would dramatically reduce the amount of cash the state would have on hand in the event of a major hurricane, and it could affect the state's credit rating, which would increase the cost of borrowing money.

In addition, the $700-million that Crist could use from the Budget Stabilization Fund would have to be repaid within five years.

Sansom, who is expected to succeed Rubio as House speaker in November, has resisted tapping the Budget Stabilization Fund, calling it fiscally irresponsible because the state's budget pressures did not qualify as a crisis. But preliminary new revenue information has the House leaders fearful that even after $3-billion in spending reductions, they might not have enough money to pay the state's bills.

"We are in uncharted waters. I don't think we've ever been in this place, certainly not in modern history," said Rubio.

The House's bailout proposal will be considered later this week by the House Policy and Budget Council, as the panel also debates a budget for next year of $65-billion, $5-billion below the current year's budget as approved in May. It would be the smallest state budget since the 2005-06 fiscal year. The Senate's bottom-line budget number is not yet available.

Advocates for health care programs are mobilizing to fight cuts in the House budget of $1-billion in human services to, among others, pediatric AIDS patients, terminally ill and transplant recipients, foster children and people who live in nursing homes.

But over the weekend, one of the House's most controversial cuts was eliminated, as Republicans restored a $14-million program that provides eyeglasses, hearing aids and dentures to an estimated 146,000 seniors on Medicaid.

"Dentures are a big deal if you don't have teeth. Eyeglasses are a big deal if you can't see," said Rep. Aaron Bean, R-Fernandina Beach, the chairman of the House Health Care Council. "People have been hollering about everything."

Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.