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State is emptying cash reserves to fill budget holes

TALLAHASSEE — Even Florida's rainy-day fund is drying up.

As Gov. Charlie Crist and legislators ponder their next budget-bailout step, one of their few emergency sources of money is shrinking fast.

The Lawton Chiles endowment was created in 1999 to honor the former governor's legacy by using tobacco settlement money to pay for health care programs. But it has lost $600-million in value during the stock market's recent nosedive.

"It gives us less to be able to draw upon," Crist said.

The Legislature this spring gave Crist the authority to borrow $354-million from the Chiles fund to patch holes in this year's state budget.

About $100-million of that has already been spent. That expense plus the stock market loss dropped the Chiles fund one-third from its June level of $2.1-billion down to $1.4-billion.

That's also the most recent estimate of the current year's budget shortfall, a figure that will be updated today by the state's economic forecasters.

The official who oversees the fund, pension fund chief Ash Williams, cautioned Crist and the Cabinet against emptying the fund now to cover a budget deficit, citing the volatility in the market.

"The market is down significantly," Williams said. "If one had to choose a time to sell an asset, the old axiom of 'buy low and sell high' comes to mind. It is hard to sell anything high at this time."

Chief Financial Officer Alex Sink agreed. "If we were going to take a billion dollars from the Chiles fund, we wouldn't have a Chiles fund left," Sink said.

The shrinking of the Chiles fund comes as Crist and Republican legislators face criticism from Democrats for implementing a 4 percent across-the-board spending freeze but refusing, so far, to call a special session on the budget.

Sink says the state is literally not taking in enough money to pay its bills and her chief of staff, Jim Cassidy, called the lack of action unconscionable in a talk to House Democrats.

Crist, parsing his words with care, wouldn't exclude possible tax or fee increases to put the budget back in the black.

"Let's see what tomorrow brings and see what revenues we have," Crist said Thursday. "Taxes aren't something I'm very warm and fuzzy about."

Pressed to flatly rule out a tax hike, Crist said: "I'm not thinking about those as options right now."

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

State is emptying cash reserves to fill budget holes 11/20/08 [Last modified: Saturday, November 22, 2008 10:26pm]
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