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Stimulus Won't End Budget Cuts In Florida

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The Associated Press

Published: February 9, 2009

TALLAHASSEE - Florida won't get enough federal stimulus money to avoid more budget cuts, the state Senate's budget leader said Monday.

That's because additional revenue shortfalls appear certain as Florida's economy continues to sputter, Ways and Means Committee Chairman JD Alexander, R-Lake Wales, told his panel.

Lawmakers are in Tallahassee for a week of budget meetings to prepare for the regular legislative session that begins March 3.

Florida's state and local governments stand to get up to $13.7 billion in federal stimulus money spread over three budget years, including the current one that runs through June 30.

This year's budget, though, may drop into the red by more than $300 million, Alexander said. He also expects a $5 billion budget gap next year.

"No single solution will solve that level of deficit," Alexander said. "There is little double that further budget reductions will be necessary."

Lawmakers cut current-year spending by more than $1 billion as part of a $2.5 billion deficit-elimination package Gov. Charlie Crist signed into law after a special legislative session last month. The plan also tapped reserves, raided trust funds, shifted dollars around within the budget and raised traffic fines.

Additional adjustments probably likely will be required during the regular session to avoid ending the budget year with a constitutionally prohibited deficit, Alexander said.

Crist's budget director, Jerry McDaniel, also told the committee Florida could lose up to $4.5 billion in anticipated stimulus money earmarked for education due to a "maintenance of effort" clause in the federal legislation. Florida may not qualify for the money because it is spending fewer state dollars on public schools this year than it did in 2006 although overall spending - state and local - is up.

Some congressional observers think the clause will not effect Florida, McDaniel acknowledged, but he said state officials are taking a conservative approach. They have asked U.S. Sen. Mel Martinez, R-Fla., to offer an amendment removing the clasue before the Senate votes on its version, probably Tuesday. Another option would be to seek a waiver from Secretary of Education Arne Duncan, McDaniel said.

It also appears Florida may be unable to use money freed up by additional federal Medicaid dollars in the stimulus plan to avoid borrowing money from the Lawton Chiles Endowment, McDaniel said.

A $700 million loan from the endowment, which invests tobacco settlement money for future use on health care programs for children and the elderly, is part of the deficit-reduction plan.

Lawmakers delayed the loan until June in hopes of avoiding it altogether by substituting state dollars saved due to the additional federal Medicaid money. The plan as presently written, though, would prohibit states from putting Medicaid savings into such reserves, McDaniel said.

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