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Gambling Receipts, Reserves Prop Up Crist's Spending Plan

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The Associated Press

Published: February 1, 2008

TALLAHASSEE - Bracing for more weakening of Florida's economy, Gov. Charlie Crist proposed a $70 billion state budget Thursday that would encourage businesses but spend gambling money and reserves to get by.

The proposal to the Legislature for the next budget year, which begins July 1, is $869 million below current spending - even after the Legislature cut it by $1.1 billion in October because of declining revenue.

It curtails spending for most state agencies, but would allocate more money for children's health insurance, energy diversity programs and 1,331 new state jobs, most of them to staff prisons. It would continue the sales tax holidays for back-to-school items and hurricane preparedness.

To balance the budget, Crist wants to tap reserves, sell more Lottery tickets, increase the fines for overweight trucks and make use of $130 million from an Indian gaming pact that is the subject of a Florida Supreme Court fight.

Crist said he expects the state's economy to improve now that voters have approved a constitutional amendment to cut property taxes.

"I believe our economy's going to get better," he said. "The passage of Amendment 1 on Tuesday will help Florida significantly, and the estimators already predict we're going to have an uptick and come out of it."

Although the proposal envisions spending less money overall, it includes expanded programs for business and alternative energy:

•$200 million for renewable energy and green technology, including $100 million to boost businesses involved in green projects and $10 million for efforts to produce electricity from the motion of the sea.

•$43.3 million (a $10 million increase) for the "Visit Florida" promotional advertising program.

•$200 million (a decrease from the current $250 million) to attract business and research to the state.

New Budget Items
Adding $200 million for alternative energy and research to a $70 billion budget may not be a large increase, but it matters because it is new, said Dominic Calabro, president and chief executive of the Tallahassee-based group Florida TaxWatch.

"Two hundred million is a big deal, because last year Florida spent little, if anything, on that kind of thing," Calabro said. "It may be small in comparison, but it's something we should do."

Still, the level of economic stimulus is minuscule compared to the overall Florida economy, which could total $240 billion in 2008, said David Denslow, an economist with the University of Florida.

"To get to the same level of stimulus the federal government is proposing now, you'd have to have a state action much bigger, potentially on the order of $6 billion, not something like several hundred million," Denslow said.

Indeed, budget writers within the governor's own Republican Party were cool to some of his ideas.

"The House believes that thoughtful spending reductions would best serve Florida's long-term, not tax increases, accounting transfers, or a new reliance on one-time or stagnant revenue sources," said House Budget Chairman Ray Sansom, R-Destin.

Sansom said the state should "continue the practice of maintaining the state's reserves, because it is fiscally prudent to be prepared in case of hurricanes and other emergencies."

Senate Fiscal Policy Chairwoman Lisa Carlton, R-Osprey, said Crist's proposal is one of many pieces of information that lawmakers will use to build the state's new budget. She said the most significant will be a revenue update that state economists are due to make in March. Crist's budget proposal is based on an estimate in November.

House Democratic Leader Dan Gelber of Miami Beach blamed Florida's revenue fix on a decade of "tax giveaways for special interests" and the Legislature's failure to broaden the state's tax base.

"While I think it may be more of a faith-based budget than one grounded in reality, at least the governor recognizes that Florida can't sustain massive cuts to education, health care and public security," he said.

Gaming Revenue Key

Crist's proposal relies on $130 million from the state's recent deal with the Seminole Indians for casino revenue although a legal challenge is pending. The House has sued Crist, contending the deal is unconstitutional because it hasn't been approved by the Legislature. House leaders have spoken out against expanded Indian gambling.

Crist also envisions just under $250 million in new Lottery revenue by increasing ticket sales through such steps as setting up vending machines to dispense instant tickets, twice-a-day drawings for some games, increased jackpots and stepped-up advertising.

Reserves the governor wants to spend include $400 million in principal from the Lawton Chiles Endowment Fund, made up of money from the state's 1998 settlement with tobacco companies. That money is invested, and only interest is spent.

Crist said he spoke to the late governor's widow, Rhea Chiles, to seek her permission to use the principal for children's health care, child welfare programs, community-based health and human services initiatives, and biomedical research.

"She agreed that it was an important time for us to invest those dollars to help children and others in our state," he said.

Chief Financial Officer Alex Sink, though, objected to Crist's plan to divert $129.5 million in reserves from the state's Workers Compensation Administration Trust Fund. "A trust fund sweep of this magnitude will require the state to raise workers compensation assessments - taxes - on Florida businesses as early as January 2009," Sink said.

Among the other highlights:

•Cut $60 million in reimbursements to health maintenance organizations to treat poor people in Medicaid.

•Save $55 million by suspending grants to some students going to private colleges.

•Make no state employee layoffs, but for the second straight year, give no across-the-board raises, either.

•Continue Everglades restoration and other environmental projects.

Tribune reporter Richard Mullins contributed to this report.

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