TBO.com - TBO is Tampa Bay Online

Florida Legislature Raids Reserves For Funds

Associated Press file photo

Lawmakers would redirect trust funds meant for specific purposes, including the Lawton Chiles Endowment anti-tobacco fund.

ADVERTISEMENT

By WILLIAM MARCH

wmarch@tampatrib.com

Published: January 12, 2009

TALLAHASSEE - Working through the weekend, Florida legislators crafted a deal to close the state's budget gap using big chunks of the state's reserve funds and trust funds intended for specific purposes, including the Lawton Chiles Endowment anti-tobacco fund.

By raiding those funds and cutting spending, the Legislature came up with almost $2.6 billion to close the gap in the $66.3 billion budget.

The need was more than expected because tax collections have declined further since the deficit was first estimated at $2.3 billion. Legislators aren't sure where the bottom is.

Small groups of legislators spent the past two days ironing out differences between cuts passed by the full state House and Senate.

The politically toughest decisions, including how much to take out of the Chiles fund, were left for the final meetings between the top budget negotiators, including Sen. J.D. Alexander, R-Lake Wales, and Reps. David Rivera and Marcelo Llorente, both of Miami.

Interest from the Chiles fund pays for child welfare, child and elderly health care programs, and anti-smoking efforts. The budget deal will remove $700 million, more than half the fund's assets.

The move angered advocates, who say the fund's future interest yields will be lower and that the assets, including stocks, will be sold in a low market.

"These politicians, these - quote - 'leaders,' are playing a dangerous game - raiding funds that should be in trust for tomorrow," said Tampa lawyer Steve Yerrid. "It's a political game they've created by cutting taxes while failing to cut spending."

Lawmakers specified that the fund transfer won't happen until June in hopes that the market will rise, and said they may use federal money from an expected economic stimulus package to reduce the Chiles fund cuts.

But Yerrid called that language in the legislation "smoke and mirrors," which only allows - and doesn't require - restoring the fund.

The fund came from a 1990s state lawsuit against tobacco companies, handled by Yerrid and other lawyers, that produced a settlement between $11 billion and $13 billion.

A trust fund intended to provide low-income housing, meanwhile, lost $190 million. That's a compromise between the House, which wanted to take out $293 million, and the Senate, which advocated $140 million.

That money will come out of a pot used to build low-income housing complexes, said state Sen. Mike Fasano, R-New Port Richey. Money given to local governments to help low-income, first-time homeowners buy existing homes, renovate their homes or avoid foreclosure was spared.

The housing cut saved a trust fund that pays for roads, airports and other transportation projects.

The House proposed cutting $200 million from the transportation fund, but senators said that money would stimulate the economy and create jobs.

Because that money is used to issue bonds and begin long-term projects, the cut would have affected road projects worth about $450 million, Fasano said.

The deal will eliminate more than 1,400 state employee positions; but because most already are vacant, it should lead to few if any layoffs of state employees, legislative leaders said.

That's not necessarily true, though, of universities and schools, which could face job cuts.

The deal includes cuts of about $480 million to public schools for K-12 education and more than $100 million for universities.

The budget deal takes $400 million from the state's Budget Stabilization Fund, its last-resort rainy day fund, leaving about $250 million, the lowest level in more than 10 years.

The $2.6 billion package includes a "cushion" of about $300 million to offset tax collections expected to be below projections, said state Rep. Dean Cannon, R-Winter Park. Sales tax collections for December, for example, were $100 million less than predicted.

"The revenue estimates have been changing every time the estimating committee has met," Cannon said.

Democrats, a minority in both chambers of the Legislature, had little influence on the budget deal and blasted it Sunday.

They charged that the Legislature could have avoided some of the worst cuts with relatively painless measures, such as increasing cigarette taxes or closing corporate tax loopholes.

"This agreement takes from the people who need it the most and fails to address the bad tax policy decisions this Legislature has made over the last decade," said Rep. Kelly Skidmore of Boca Raton.

But Republicans said with an even worse budget problem looming for the coming year, this was not the time to take more of Floridians' money.

When lawmakers come back to Tallahassee in March for their regular session, during which they will tackle next year's budget, they will face another deficit of at least $4 billion.

GOP legislative leaders have said they probably will be forced to increase government revenues.

"We wanted to hold back any revenue cards until then," said Sen. Victor Crist, R-Tampa. "Our constituents have voiced very loudly that they cannot afford to pay more taxes right now. We are losing jobs; 7 percent of our constituency is on employment."

After a legally required, 72-hour cooling-off period, a final vote on the package could come Wednesday.

Information from the Associated Press was used in this report. Reporter William March can be reached at (813) 259-7761.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT