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State Might Need To Plug $5 Billion Deficit Next Year

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By CATHERINE DOLINSKI | The Tampa Tribune

Published: February 9, 2009

TALLAHASSEE - The state still faces a deficit of up to $700 million this fiscal year - and $5 billion next year - despite last month's budget-cutting session, the Senate's top budget chief said today.

On top of that, said JD Alexander, head of the Senate's Ways and Means committee, property taxes are expected to yield $1 billion less than the state needs just to maintain the status quo for K-12 public school funding.

The sobering budget news sets the stage this spring for a repeat of last year's legislative session, when lawmakers had to carve into both the current and coming year's spending plans. But this spring's session will bring especially painful twists – deeper budget holes, and difficult decisions about raising taxes.

"Even with anticipated federal stimulus funds, there is little doubt that further budget reductions will be necessary," Alexander said.

State tax receipts were continuing to plunge even as lawmakers and Gov. Charlie Crist agreed last month to a $2.3-billion package of budget cuts, fee increases and raids on state reserves. The reductions cut across the spectrum of spending, from health care to education to the environment.

The final bill also left roughly $300 million unspent in the current budget to account for any additional drops in revenue. But now it appears the state could be $700 million short by year's end on June 30, Alexander said, with only about $300 million left to cover the gap.

"We try to carry at least $200 million from year to year," said Alexander, R-Winter Haven. "The cupboard's getting pretty bare."

The state's top analysts will meet again in March to update their projections for state tax collections. But "there is agreement between the House and the Senate that we will have to address both year's budgets in the 2009 session," said Jill Chamberlin, spokeswoman for incoming House Speaker Larry Cretul.

Alexander said next fiscal year's shortfall, previously estimated as high as $4 billion, could top $5 billion because of a combination of revenue drops and cost increases – among them, rising enrollment in Medicaid, greater need for welfare programs and an increasing prison population.

Adding to the chaos is the prospect of a $13-billion handout from the federal government. The federal stimulus package remains a moving target in Congress. But with budget pressures bearing down, state lawmakers are already bickering over how best to spend Florida's share.

Monday, state senators raised concerns about using a temporary federal handout to shore up ongoing programs. That's making a problem worse by putting it off, said Sen. Steve Wise, who oversees K-12 education spending.

Eventually, said Wise, R-Jacksonville, the state will have to fill the enormous budget gap left after the emergency stimulus funding ends. "What I'm really afraid of is that we're selling something that we can't raise enough revenue to cover."

Jerry McDaniel, budget director for Crist, told the panel that Congress appears inclined to give Florida upwards of $4 billion for Medicaid. That infusion he said, might allow Florida to shift money out of Medicaid into other areas of the budget.

Sen. Nan Rich, vice chairwoman of the Senate's health care budget committee, responded with alarm. "I'm having a real hard time understanding how we're looking at having excess money when we don't fund our Medicaid program properly, or many other areas of health care – that this becomes a pot of gold for other people to use.''

Of course, lawmakers debate the budget every year – along party divides, and sometimes along geographic and philosophical ones. But those arguments could take on new importance this session.

That's because the stimulus money probably falls into the category of one-time, nonrecurring dollars. Florida's Constitution allows lawmakers to spending nonrecurring dollars on no more than 3 percent of the state's annual expenses. If lawmakers want to prop up more than 3 percent of the recurring budget with nonrecurring money, three-fifths of both the House and Senate have to agree to do it.

"I believe it's highly likely that we will exceed the 3 percent cap in … almost any way we go," said Alexander.

That means, he said, having to get a three-fifths vote on the state budget itself. The Republican majorities in both the House and Senate exceed the three-fifths bar by only a few members, so every vote will matter.

Reporter Catherine Dolinski can be reached at (850) 222-8382.

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