Think The Budget is Bad? It’s Getting Worse
The $70.4 billion state budget awaiting action by Gov. Charlie Crist is already looking like a museum piece – a fattened brontosaurus of a spending plan whose future is threatened by a harsh new age.
The budget includes about $2.5 billion in federal stimulus money – the last installment of $16 billion in Washington cash that flowed to Florida the past three years, allowing lawmakers to avoid major tax increases or the deepest spending cuts.
Without that big injection of money, many lawmakers and budget experts are already wondering: Is a political ice age on the horizon?
At the very least, a $6 billion budget shortfall is projected – almost double the level of red ink lawmakers faced this year.
“Next year, the budget is going to be much tougher, and not because the economy isn’t growing and showing good signs of life,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “But when that stimulus goes away, how do you replace it?”
Crist is expected to sign this year’s budget into law by Memorial Day weekend. But the measure, which takes effect July 1, is certain to undergo some sharp scrutiny from the governor.
There’s little love between Crist and the Republican-ruled Legislature, a relationship that turned toxic when he broke with the GOP last month to continue running for U.S. Senate as a no-party candidate.
In his first year as the state’s chief executive, Crist vetoed a record $459 million in programs and projects. While he may fall short of that level with this year’s leaner spending plan, whatever he cuts will be tucked into reserves as a cushion likely needed next year.
One controversial money-making idea has already been removed from the table: Offshore oil-drilling.
Incoming House Speaker Dean Cannon, R-Winter Park, and Senate President-designate Mike Haridopolos, R-Merritt Island, had been leading advocates for lifting the state’s 20-year ban on drilling in Florida’s Gulf coastal waters in an attempt to draw millions into the budget from energy company leases and fees.
But the April 20 Deepwater Horizon accident has ended such talk.
Indeed, Senate Democratic Leader Al Lawson of Tallahassee said those once supporting drilling, “Are walking backward faster than Michael Jackson ever could.”
Without oil-drilling, Republican leaders this election year look to the future and see more cuts.
“More than ever, my conservative credentials are going to be put to the test,” Haridopolos said.
In ending the legislative session last month, lawmakers’ didn’t leave the cupboard completely empty. About $1.8 billion in reserves remain – with the possibility that another $600 million could be added to that if Congress approves enhanced Medicaid dollars for states.
But such money will likely disappear fast down Florida’s budget hole.
Baker and other economic forecasters have said they expect Florida’s unemployment rate to continue rising above its already record 12.3 percent through summer, dampening the faltering economic recovery.
Other rising budget bubbles surfacing next year include a first installment of $214.5 million that must go to the state’s budget stabilization fund, a constitutionally created reserve that has been virtually drained with the recession. Lawmakers must repay more than $1 billion over the next five years.
Lawmakers also must repay the federal government $130 million next year for money borrowed to sustain the state’s bankrupt unemployment compensation trust fund.
Florida owes the feds five years worth of payments on a debt mounting because business organizations convinced lawmakers to withdraw a tax increase that was to kick in this spring.
Some think next year’s tough times may finally prompt lawmakers to do something other than cut spending.
Such long-talked of approaches as closing some of the billions of dollars in state sales-tax exemptions, taxing Internet sales, and extending the state’s corporate income tax to currently-exempt firms may gain new life as usually anti-tax lawmakers struggle to balance what may be the starkest budget in memory.
“Maybe this becomes the year that we look at real solutions,” said John Hall, executive director of the Florida Center for Fiscal and Economic Policy, a progressive-leaning think tank. “When you have a crisis, even in your personal life, you sometimes can make a positive change. Maybe this is that time for Florida.”