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After Gov. Rick Scott stages budget rollout, he plays to skeptical lawmakers

TALLAHASSEE — Calling for billions in tax and spending cuts, Gov. Rick Scott will unveil a budget Monday that's as much a policy road map as it is a sweeping political statement.

Even Scott's venue for rolling out the budget drips with political symbolism: a tea party rally he helped establish in the small rural town of Eustis, where activists also will celebrate a Florida court ruling against President Barack Obama's health plan.

Scott's first proposed budget is his best chance to make good on his campaign promise to run government like an efficient business. It also sets the tone of his relationship with the Legislature, which has to turn his plans into a balanced budget.

The $5 billion question: Is Scott's budget realistic?

Legislative leaders aren't sure, noting that next year's budget faces a shortfall of at least $3 billion and Scott proposes to make the hole even bigger by insisting on $2 billion in tax cuts. They want Scott to explain how much more they'll cut from schools, prisons, roads, courts, environmental programs, libraries, parks and health care.

"This is a political bombshell," said Glenn Robertson, who was budget director for Govs. Bob Graham and Bob Martinez, respectively a Democrat and Republican. "The key thing is how seriously he's taken."

"He'll probably get a lot of applause in Eustis. But the Legislature wants details, specifics."

Never before has the Republican-led Legislature cut $5 billion in one session. Over the past five years, though, lawmakers have trimmed a total of about $5 billion from one part of the budget, the general revenue section, which accounts for most major government services.

Scott has described himself as "absolutely" devoted to the principles of supply-side economics. He describes the state budget as bloated and pledges to propose the nation's "most fiscally conservative budget."

"The more money we put back into the private sector — that's what's going to grow jobs. We're going to grow private-sector jobs," he said. "And the only way you can do that is by holding government accountable."

But economists such as the University of Central Florida's Sean Snaith caution that slashing spending in a state where the state is, in fact, the largest employer could have a short-term "contractionary" effect that tax cuts won't compensate for.

"The supply-side argument that cutting taxes will raise revenue is more valid when the tax burden is higher than it is in Florida," Snaith said. "That's a tough sell in Florida — that somehow the rates are so high that it's suppressing the economy. I think it's part of a larger pro-business message he's trying to sell."

This year's $70.4 billion budget is about as big as it was in 2006 — the high watermark for tax collections and the economy — due to federal stimulus money and tax increases the Legislature passed two years ago on drivers and tobacco smokers.

Now, the stimulus money is going away. And Scott has suggested he wants legislators to undo the tax increases on drivers — something legislators aren't keen on because they already took the political hit.

Scott also wants legislators to cut more than $1 billion in school property taxes and then transfer money from other sections of the budget. To offset the lost revenue, state workers would contribute to their pensions.

He also wants to trim about $700 million in corporate income taxes in Florida, which already has one of the nation's lowest rates.

One big target for savings: the growing health insurance program for the poor and financially challenged, Medicaid.

More than half of Medicaid's $20.3 billion tab is picked up by the federal government, which can halt some wholesale changes. Scott and the Legislature can cut up to half of the program's so-called optional services, many of which are popular and are designed to save money, however. Regardless, the state would lose hundreds of millions in federal matching money.

"To the extent that it does," said University of Florida economist David Denslow, ''that's a loss to the state and in the first year probably would reduce Florida's economic activity dollar for dollar."

More than 3.2 million Floridians receive Medicaid services from 80,000 Florida providers, including hospitals, doctors, nurses and caseload workers. All of them have lobbyists and activists. Many contribute big sums to politicians and political causes, or they have unions and associations that petition lawmakers and stir up their constituents.

Scott, a political newcomer elected with $73 million of his own money, has warned about the influence of special interests.

Scott's budget could pick a fight with even more lobbies because he's likely to rejigger the budget by eliminating certain designated pots of money known as trust funds. Many are politically off limits because they were created long ago with certain lobbies to help regulate their interests, from insurance to guns.

All told, trust funds account for about 27 percent of the budget, compared to general revenue, which composes 34 percent (the rest is federal money). Since the $3 billion to $4 billion shortfall is in the general revenue section of the budget, Scott wants to transfer billions in trust fund money to help plug the gap.

Because it meets for only 60 days — starting March 8 — the Legislature historically can handle only a few big issues. Scott wants at least seven: cutting taxes, cutting spending, eliminating some regulations, restructuring budget trust funds, transforming Medicaid, merging state agencies and cutting state-worker pension benefits.

"It's wonderful to do big, but the more detail we get, the more helpful," said J.D. Alexander, the Senate's budget chief.

Former Gov. Martinez said governors often get much of what they want if they work hard enough. But they also learn a lesson about the reception of their plans in the Legislature: "As far back as I can remember, they were dead on arrival," he said.

Times/Herald staff writer Steve Bousquet contributed to this story.

After Gov. Rick Scott stages budget rollout, he plays to skeptical lawmakers 02/05/11 [Last modified: Monday, February 7, 2011 1:21am]
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