Gov. Rick Scott's proposed 'Florida First' budget: $79.3B, tax cuts

JACKSONVILLE

Gov. Rick Scott on Monday proposed a $79.3 billion budget for next year that would spend more on schools, cut taxes by $1 billion and eliminate nearly 1,000 more full-time jobs from the state workforce.

Scott rolled out his spending plan at Harbinger, a sign-making company on Jacksonville's south side where owner Roger Williams and dozens of his workers helped to promote Scott's call to permanently end the sales tax on equipment used in manufacturing.

Scott's "Florida First" budget would be about $1 billion more than current spending, after allowing for Scott's $461 million in line-item vetoes.

If the budget roll out was a sign of anything to come, look for plenty of disagreements with the Legislature over the size of tax cuts, how to boost school funding, and how best to grow the state's economy.

The governor's budget is only a recommendation to the Legislature, which has the final spending authority, and in the past five years lawmakers have accepted only pieces of his recommendations. Senate President Andy Gardiner has already said he would support starting with just $250 million in tax cuts and wants to restore budget cuts in various programs.

Scott's proposal puts on record his priorities as the biggest needs in the state and where he's prepared to do battle with lawmakers.

And he's been consistent. His plan reflects two pillars of his successful 2014 campaign for re-election in which he promised Florida voters $1 billion in tax cuts over two years and a "historic' increase in per-pupil spending. His budget sets aside $7,221 per student and would surpass the previous record for per-pupil funding by $95.

But the bulk of Scott's tax reductions this year are aimed at businesses, a point Democrats in the Legislature are already questioning.

Scott would permanently eliminate income taxes on manufacturing, retail businesses and cut taxes on commercial leases over two years, and permanently eliminate sales taxes on manufacturing equipment. Those cuts alone would be worth over $1 billion. For consumers, Scott has a $46 million sales tax exemption for college textbooks for one year, and a nearly $73 million break on temporary sales taxes for back to school shopping and another for disaster preparedness supplies.

"His budget proposals continue to show that he cares a lot more about corporations than he does the people of Florida," said Rep. Mark Pafford, D-West Palm Beach and leader of the House Democratic Caucus.

And on school funding, Scott is certain to have trouble getting his way even with his fellow Republicans who have already questioned his tactics. For example, about 85 percent of his proposed $507 million boost in public school spending would come from higher property tax bills on businesses and homeowners as a result of higher property values.

"What's great in our state is that property values are up. Incomes are up. Jobs are up," Scott said during his Jacksonville appearance.

But even how much money the government even has to spend is an argument. Scott cited a projected budget surplus of $1.3 billion — a figure disputed by state economists who say the surplus is closer to $635 million. The governor's office staffers declined to explain how they came up with the estimate.

Scott said the state's declining unemployment rate and continued population growth are signs the state is in good health under his watch.

"We're clearly headed in the right direction," Scott told reporters. "Now we've got to invest that money well."

As has been the case since he entered office, Scott is again taking aim at the size of the state government.

Scott's budget continues to increase the size of the state's bottom line while reducing the number of employees by 863 positions, a signal that the state continues to shift jobs to the private sector.

The two agencies absorbing the most cuts are the Department of Health and Department of Environmental Protection, both losing staff that the governor's office says are mostly vacant positions.

Scott said many of the cuts at the Department of Health are as a result of jobs moving to Medicaid managed care contract providers. But others are in county health clinics, which last year faced cuts of nutritionists who advise poor families and health counselors.

More than 50 job cuts in Scott's proposal come from the state parks.

The agency which would receive the largest staff increase is the Department of Corrections, with 472 new corrections officers. Outside auditors warned that staffing levels at the troubled agency are at dangerously low levels and Corrections Secretary Julie Jones has said that turnover remains high.

Jones told a Senate committee last week that the agency needs at least 1,000 additional corrections officers to have enough back-up staff to fill all shifts, especially when corrections officers are on vacation, in training, out sick or when someone resigns or retires.

She also said that although corrections officers have not had a raise in eight years, she did not expect the governor's budget to include any salary increases for prison staff. Instead, she said, she would "work with the Legislature" to obtain salary increases.

Notably absent from the governor's recommendations are additional staff at the state's mental hospitals, which came under scrutiny in a recent Tampa Bay Times/Sarasota Herald-Tribune special report about violence that has come in tandem with budget cuts over the last five years.

Scott has asked for 11 new beds for patients ordered into the hospital by a judge, additional security cameras and alarms for employees who work with patients. But some state lawmakers have called for increased staff at the institutions, where a single worker could be responsible for as many as 15 mentally ill patients at once.

For the eighth year in a row, no money is proposed for across-the-board pay raises for state employees.

With pay increases so hard to come by, state legislators say critical government functions are being affected as skilled workers leave for better pay, leaving behind less seasoned employees. The state cannot afford to lose more state forest firefighters, highway patrol troopers, corrections officers and mental health workers, said State Sen. Bill Montford, D-Tallahassee, said.

"It doesn't take a genius to figure out if you cut, cut, cut, you hit a point where you can't cut anymore," Montford said of the state government work force. "Good government costs money."

Instead of pay raises, Scott is floating a three-tiered bonus pay plan that would allow workers to earn up to $1,500 more a year.

"We need to continue to focus on how do we make this state government more efficient… It's somebody's tax money," Scott said.

Scott is headed for another political showdown with Agriculture Commissioner Adam Putnam, who was outraged that Scott vetoed $2,000 pay raises for state forestry firefighters in June. Putnam proposed the pay raise again and Scott did not put it in his budget proposal.

"I'm disappointed," Putnam said in a statement, "but I'm not surprised after last year's veto. With a starting salary of $24,000 per year, our firefighters are at least as deserving as those who got pay increases last year and those who have pay increases included in the budget this year."

There is one key exceptions to Scott's philosophy on pay raises. Scott supports up to $10,000 pay raises for crime lab analysts and supervisors at the Florida Department of Law Enforcement, an agency hampered by high turnover due to low starting pay.

Scott also is positioned for a fight over health care. The governor wants to eliminate an automatic increase in Medicaid payments to hospitals, and some lawmakers will fight him for not proposing that the state cover a projected loss of $400 million in payments to hospitals under the low-income pool program.

"Let's look at where our hospital industry is," said Scott, a former chief executive of the nation's largest for-profit hospital chain. "They are at record profits again."

Already, Scott has been locked in a fight with the Florida Senate over money he says he needs to recruit companies to move to Florida — a key element of his campaign for office. Scott's budget includes $250 million for a new Enterprise Fund to expand programs bring in companies, even as Legislators have questioned how that fund has been structured and used in the past.

The governor's budget will be the starting point for negotiations with the House and Senate in the 2016 regular session that begins on Jan. 12. The new budget will take effect next July 1.

Times/Herald staff writers Mary Ellen Klas, Michael Auslen and Kristen M. Clark contributed to this report. Contact Steve Bousquet at bousquet@tampabay.com or (850) 224-7263. Follow @stevebousquet.