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Tight Martinez budget would increase cigarette tax by 19 cents

Determined to avoid a general tax increase in an election year, Gov. Bob Martinez is proposing a thin $26.2-billion state budget for 1990-91 that features one hefty tax increase and plenty of new fees. The tax on cigarettes would rise by 19 cents a pack and become the highest in the country. Fees for driver's licenses and motor vehicles also would sharply rise, particularly for new residents bringing cars into the state. They would pay a new, $195 fee per car in addition to other charges.

Tuition for university students would rise by 8 percent for the second year in a row. And new fees would be imposed on underage drinkers and the businesses who serve them.

In all, more than a half-billion dollars in new taxes and fees have been blended into the spending plan recommended by the Republican governor who embraces President Bush's theme of "read my lips - no new taxes."

Martinez's budget proposal, which was released Thursday, also relies heavily on borrowing more than a billion dollars to pay for new transportation and environmental programs. It offers teachers and state employees a 3 percent raise that critics complain will not keep pace with inflation, and it does not replace state programs cut during a budget crunch several months ago.

At a press conference, a cheerless Martinez emphasized some of things his spending plan would do: Provide $30-million more for computers for school children, $120-million more to fight drug use and $134-million to build more than 9,400 new prison beds.

But the governor spent more time defending his proposal than selling it.

"I think it's a budget that meets the critical needs of the state of Florida," Martinez said.

The governor's proposed budget is only a recommendation to the Legislature. It is the initial step in a debate that will last for months and further foul relationships between Republicans and Democrats.

After Martinez released his spending plan, the two Democrats who lead the Legislature immediately criticized it. House Speaker Tom Gustafson was particularly harsh in his assessment of Martinez and his proposed budget.

"It's a classic case of a corporate entity having these early signs of bankruptcy, which he has pushed us to by his refusal to recognize needs when they become readily apparent," said Gustafson, a Fort Lauderdale Democrat. "This borrowing, this failure to satisfy needs, is going to create a disastrous situation for this state, and it will only get worse as long as he continues to follow the suggestions of his political advisers that this state can survive without new revenue sources."

The one tax increase that Martinez proposed didn't satisfy Gustafson. Raising the cigarette tax would bail out a bankrupt program to pay for medical care for the poor, but Gustafson said raising it by 19 cents is "a pretty radical and probably irresponsible increase in taxes."

Senate President Bob Crawford, a more conservative lawmaker from Winter Haven, diplomatically called the governor's proposed tax increase "unusually high."

"I predicted early on that putting a budget together this year would be a legislator's worst nightmare, with tax increases and budget cuts," Crawford said. "And I would say to the governor, 'Welcome to the nightmare.' " While criticizing Martinez, neither Gustafson nor Crawford were prepared to suggest specific ways to raise more money to pay for more state programs.

"I'm sure that the Legislature is going to have to be creative itself to make this year work," Crawford said. "I think we will have to consider all types of strategies to make this budget fly."

Since his first year as governor, Martinez has adamantly avoided talking about major tax increases. His popularity plummeted in 1987 following the uproar over the failed tax on services and the increase of the sales tax on goods by a penny.

For the last two years, the governor has successfully rebuffed attempts by some legislators to raise taxes on cigarettes, beer and gasoline. Three special sessions on transportation ended without any agreement in 1989 because he vowed to veto a gas tax increase.

But in recent months, the state has been pinched by a slowing economy and a rising need for more money. In November, a $280-million projected shortfall forced state officials to adjust the spending plan and cut $110-million in programs that have not been replaced.

Now running for re-election, Martinez found a way Thursday to raise more money to provide medical care for the poor, buy environmental lands and build roads and prisons. He recommended increasing a tax, raising fees and borrowing more than a billon dollars.

To replenish an account that pays for indigent health care, the governor turned to the cigarette tax. His proposal to raise the tax from 24 cents a pack to 43 cents a pack would raise $259-million. A pack of cigarettes can cost as much as $2 in a vending machine.

There is certain to be controversy over this proposal.

Tobacco lobbyist Guy Spearman promised a "fight to the death."

"We don't see any correlation between the indigent health care problem and the cigarette tax," Spearman said.

Hospital lobbyists, who were relieved that the governor did not recommend increasing assessments paid by hospitals for indigent care, vowed to fight for a different reason. The governor has proposed eliminating the separate account that pays for indigent care and use the state's general account instead.

"Once you have lost the trust fund . . . there are no assurances that the taxes (on cigarettes and hospitals) over the next several years will continue to support indigent health care," said Tony Carvalho, of the Association of Voluntary Hospitals of Florida.

To free more money for other programs, Martinez proposed a series of hefty fee increases for motor vehicle registration, auto tags and driver licenses (see chart). Hit hardest would be people moving to Florida, who would pay a new $195 fee to register each of their vehicles in the state.

In addition to the $195, those new residents would have to pay a $30 fee approved by the Legislature last year that helps pay for highway patrol officers and anti-drug programs. The $30 fee also applies to Florida residents who buy additional vehicles, but those residents would not pay the $195 fee.

Money from the fee increases would go to the Department of Highway Safety and Motor Vehicles, and it enabled Martinez to shift $145-million from that area to others.

The governor used another technique - borrowing - to bolster his

transportation and environmental programs. Spending for transportation

programs would increase by 20 percent, but that includes two proposals to borrow money that the Legislature has so far rejected. Without borrowing money to build toll roads and buy land for future roads, the state would spend even less on road construction next year than it spending this year.

On the environment, Martinez wants to borrow $300-million to kick off his plan to dramatically increase the amount of environmentally sensitive land the state can buy. The loans would be repaid by fees charged on real estate transactions, and the proposal has been widely praised by environmentalists.

Martinez does not plan to borrow money to pay for 9,400 more prison beds. But those additional beds still will not provide enough space to stop the state from releasing thousands of inmates early because of overcrowding.

The governor also proposed dozens of education and social service programs, including $15-million for expanded pre-kindergarten programs; $22.1-million for increased child care services;

$24.4-million for a new, improved health care program for poor children; and $10.5-million for federally-mandated increases in Medicaid for children up to age 6.

But social services advocate Jack Levine said Martinez's social services budget won't help Florida gain ground. For example, he said 20,000 children will remain on waiting lists for subsidized day care.

"It is a budget that has some pieces, but it still leaves three of four children in need, still in need," Levine said.

One of the topics that generated the most criticism Thursday was Martinez's proposal for 3 percent salary increases. Raises for state employees, university and community college personnel would take affect in January 1991. Public school teachers' raises would be in affect for a full year, beginning when the school year starts.

Education officials were astounded at the governor's proposal, which would be the lowest salary increase for teachers in years.

"His offer of a 3 percent salary increase for teachers is immoral," said John Ryor, executive director of the Florida Teaching Profession/NEA.

Governor's budget at a glance Some budget proposal highlights: The tax on cigarettes would increase 19 cents a pack and become the highest in the country.

Tuition at state universities would increase 8 percent.

The fee for a duplicate or replacement driver's license would increase to $15.

3 percent salary increase for state workers and teachers.

$30-million more for school computers.

Borrowing $300-million to buy environmental and recreation lands.

Borrowing $604-million to build new toll roads, including the Northwest Expressway in Hillsborough County.