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Federal stimulus causing budget trauma for Florida lawmakers

The rescue plan funds are intended to address unmet needs and ease financial losses suffered by hundreds of thousands of Florida residents who have lost jobs.
State Sen. Kelli Stargel, R-Lakeland, who is the Senate budget chief, speaks during a Senate Rules Committee hearing. The $10.23 billion pot of one-time federal money arriving in the next year from President Joe Biden’s American Rescue Plan Act has created a bit of budget trauma as legislators try to wrap up the annual budget that this year is expected to exceed $100 billion.
State Sen. Kelli Stargel, R-Lakeland, who is the Senate budget chief, speaks during a Senate Rules Committee hearing. The $10.23 billion pot of one-time federal money arriving in the next year from President Joe Biden’s American Rescue Plan Act has created a bit of budget trauma as legislators try to wrap up the annual budget that this year is expected to exceed $100 billion. [ STEVE CANNON ]
Published Apr. 21
Updated Apr. 22

TALLAHASSEE — After a decade of honing their skills as budget cutters, Florida’s Republican legislative leaders are having a hard time deciding how to spend.

The $10.23 billion pot of one-time federal money arriving in the next year from President Joe Biden’s American Rescue Plan Act has created a bit of budget trauma as legislators try to wrap up the annual budget that this year is expected to exceed $100 billion.

The rescue plan funds are intended to address unmet needs and ease financial losses suffered by hundreds of thousands of Florida residents who have lost jobs, encountered health problems or saw their businesses face deep financial declines.

But instead of directing one-time payments to residents and businesses recovering from the crisis, lawmakers have responded by doing what they know best: earmarking giant chunks of money to create infrastructure in already-established programs such as road repairs, sewer and water projects, and college and university building construction, while squirreling away another $2 billion of the federal money into existing state reserves.

“We’re just trying to figure out where we put these in a way that’s going to benefit people the best, and not be ticky tacky little things that starts getting everybody in trying to fight for this little teeny piece,’' said Senate budget chief Kelli Stargel, R-Lakeland.

The House and Senate have each passed budgets that differ by a whopping $500 million, but included in neither plan is spending from the federal windfall. On Wednesday, they released their priorities over how to spend the stimulus money. While the Senate has earmarked only $3.3 billion for seven programs, the House has proposed spending $8 billion on 13 programs, also primarily focused on infrastructure.

The Legislature is barred by law from spending nonrecurring revenue such as the stimulus cash on recurring needs but the federal package provides an unprecedented opportunity to find creative ways to meet long unmet needs.

‘Windfalls for well-heeled’

Senate Democratic Leader Gary Farmer of Lighthouse Point said the reflexive cut-first approach to Florida’s budget process has left Republicans ill-prepared to respond creatively to meeting the needs of Florida residents to recover from the pandemic.

“When windfalls happen, they go to those who are already well-heeled,’' he said.

“With interest groups competing for money, it becomes difficult to decide how to spend it. But if you want to spend money for the common man and woman, it’s a lot easier because you don’t have inter-industry fights.”

On Wednesday, Senate Democrats released what they would do with the money if they controlled the Legislature. More than $8 billion would go to direct aid to Floridians in the form of rent relief of up to $6,252 per household. They would give money to landlords who are struggling to keep up with maintenance and provide $1,000 bonuses to hospitality and tourism industry workers laid off during the pandemic. And they would give $1,500 to teachers, school support staff and private-sector “essential critical infrastructure employees” who earn less than $30 per hour.

Unlike 43 other states that met during the first year of the pandemic sorting through priorities and building plans for when the federal assistance arrived, Florida’s Legislature stayed home. Lawmakers convened their annual 60-day session almost a year into the crisis, and the attention to spending the federal relief funds has waited until the final two weeks.

By contrast, shortly after Congress passed the American Rescue Plan, Gov. Ron DeSantis held a March 16 press conference and, while he complained that Florida wasn’t getting enough money, he also outlined his plan for spending $4.1 billion of the $10.2 billion package.

In addition to infrastructure investments, the governor proposed heavy one-time investments aimed at job-creation programs, behavioral health initiatives and giving one-time $1,000 bonuses to 3,600 public school principals, 180,000 full-time classroom teachers, as well as thousands of police officers, firefighters and paramedics.

“I think that the proposals that I’ve outlined today, really do address important issues for the state in terms of roads in terms of seaports in terms of education, in terms of resiliency that I think most folks will have no problem getting behind,’' DeSantis said. “So all in all, we’re getting the short end of the stick — make no mistake about it. But we’ll make the best of what we have and I think we’ll be able to to get a lot done for the people of Florida.”

So far, legislative leaders, however, have included only the governor’s infrastructure spending and repair of the troubled unemployment compensation system in their stimulus spending plans.

And not all Republicans think the state is getting shortchanged.

Rep. Randy Fine, the House’s top education budget negotiator, told reporters on Sunday after the Legislature’s first round of budget negotiations that the stimulus money intended to help schools reopen is “money we don’t need.”

“It is an absolute travesty that the federal government has put our children in debt to give us education funding that we simply do not need, but we are going to be as responsible as we can with it,” Fine said.

Medicaid expansion

That sentiment angers Democrats who again this year have urged the Republican-controlled Legislature to expand Medicaid under the Affordable Care Act. They argue the policy, which would cover hundreds of thousands of uninsured Floridians, would help improve health outcomes for Florida’s working poor residents.

This year, with the American Rescue Plan, they argue that Florida would have would have enough extra Medicaid money to exceed the cost of expanding the program — at least for the next two years, according to an analysis by the Kaiser Family Foundation.

Democrats propose spending $520 million of the $10 billion in federal stimulus money on the initial cost of Medicaid expansion. But, as with every year, Republicans have balked at the idea, arguing expansion is not worth the cost to the taxpayer.

“If you asked me, do I want to give somebody Medicaid, or do I want to give them a job where they don’t need Medicaid, I want to give them a job where they don’t need Medicaid,” Republican Senate President Wilton Simpson, R-Trilby, said earlier this month.

Sen. Annette Taddeo, D-Miami, tried and failed to get support for a bill to expand Medicaid this year.

“Number-wise and money wise, it makes zero sense that we’re turning it down,” she said. “Show me one red state that has expanded Medicaid that has decided ‘you know what? It’s a bad idea. Take it back.’”

Education questions

Senate leaders also provided few details on how they want to use $12 billion in federal relief aid earmarked specifically for education, including $7 billion the state is expected to receive from the American Rescue Plan Act to help schools safely reopen and support students who have experienced academic losses during the pandemic.

House Speaker Chris Sprowls said he believes the Legislature should give the Florida Department of Education spending authority over the $7 billion so the department can directly release the funds to school districts.

“There’s still a lot of discussions that are occurring,” Stargel said. She suggested they were still negotiating the final budget and it included considering the cash bonuses sought by the governor. “It is a priority to make sure that we recognize our teachers,” she said.

“The point of the American Rescue Plan package was to offset costs related to COVID, specifically healthcare, and to help the millions of people who were pushed into poverty due to COVID and help businesses, particularly small businesses,” said Rep. Carlos Guillermo Smith, an Orlando Democrat. “There’s no direct relief for small businesses and Floridians who have really struggled due to COVID, like we saw in other states.”

Smith tried and failed last week to amend the House budget to spend $52 million of the stimulus money financing grant requests from cultural programs and museums, including theaters, performances and arts exhibits forced to close for much of the past year. He also attempted to earmark $795 million to cover for one year nearly 23,000 lower-income Floridians with developmental disabilities who are on waiting lists for state services.

Evidence of innovation

However, as House and Senate Republicans rely on tried and true arguments to adhere to their status quo approach to budgeting, they showed they could get creative when it comes to cutting taxes for businesses.

The second bill passed and sent to the governor this session expands the state’s sales tax revenue to cover all online purchases. The measure, which was quietly signed into law by the governor this week, has long been sought by retail companies who complain there is an unfair advantage for online retailers who don’t collect sales tax.

But under the bill, the proceeds from the tax increase won’t go into the state’s general revenue fund, but instead be used to offset a $713.5 million tax increase businesses face this year to replenish the state’s unemployment compensation fund that has been tapped dry by the pandemic.

The fund will be restored from proceeds of the online sales taxes instead of raising taxes on businesses. When the fund reaches $4 billion, estimated in four years, revenues from the online tax will then shift to providing businesses with a different tax break: cutting $1 billion in taxes paid annually by businesses for rent on offices, warehouses and other commercial space.

Stargel told reporters Wednesday that because so much of the federal money has not yet been received, legislators may decide to store it away and spend it next year. “So we don’t have to make all the decisions right now,’' she said.

Smith, the Orlando Democrat, fears that approach will effectively reduce pressure for them to spend the stimulus funds to help individuals most in need.

“They say what they think people want to hear and then they wait for the media coverage and the public pressure to dissipate,’' he said. “And then they move on, like nothing happened.”

Herald./Times Tallahassee Bureau reporter Ana Ceballos contributed to this report. Mary Ellen Klas can be reached at meklas@miamiherald.com and @MaryEllenKlas

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