Lawmakers skeptical of Crist's $69.2 billion budget proposal

Gov. Charlie Crist proposed a new state budget Friday morning that cuts taxes while boosting spending on education and the environment -- priorities that some lawmakers say they share but may not be able to pay for next year.

Crist's $69.2 billion plan for 2010-2011 exceeds this year's $66.5 billion of spending. Included: revival of a back-to-school sales tax holiday, new spending on land conservation and a $179 increase in spending per K-12 student.

Florida has not declared a sales tax holiday since 2007, when revenue shortfalls began forcing state lawmakers to make heavy budget cuts. Crist is proposing a 10-day holiday this year, at an estimated loss of $52 million in sales tax revenues.

"He wants do as everything he can to give money back to taxpayers," said Sen. Mike Fasano, R-New Port Richey, who has pushed to restore the holiday.

Businesses would also get a tax break, since Crist is proposing to cut corporate income taxes on the first $1 million in profits. Cost: $57.4 million.

Florida can afford it, Crist said. "For the first time since I've been governor, we actually have more revenue coming into the state treasury, rather than less ... It's about $2 billion more [that] we can anticipate. That certainly helps us fills the gaps significantly."

The governor painted a rosier picture of the state's resources than many lawmakers have in recent months, as state analysts have warned of rising state costs that are outpacing tax receipts.

Expecting a state shortfall that could exceed $3 billion in 2010-2011, House and Senate members are bracing for what they expect to be another brutal session of budget-cutting this spring.

Crist's plan includes cuts of at least $200 million, his budget director said, characterizing them as mostly "administrative." The cuts include about $10 million saved by closing several under-used juvenile detention facilities -- including Hillsborough East, which can hold 50 people but averages only 38 daily.

More critical is the $1 billion that Crist expects the federal government to provide to cover Florida's rise in Medicaid costs. Enrollment in Medicaid, the primary government program that supports the poor, sick and elderly, has increased sharply along with rises in unemployment and foreclosures.

The money would come from an extension of stimulus funding to states for Medicaid that Congress is considering. To date, said Jerry McDaniel, Crist's budget director, there are no serious indicators that Congress won't approve that relief.

Crist's plan also entails tapping reserve funds and counts on more than $430 million in revenues the state would receive if lawmakers approve a gaming compact with the Seminole Tribe, something Crist has yet to accomplish since he took office in 2006.

The compact, revised by Crist and the Seminoles in August, cannot become law without the Legislature's approval. But a House committee voted unanimously this month to reject the compact, which pari-mutuels have criticized for being overly generous to the tribe, and social conservatives have criticized for over-expanding gambling in the state.

At the time, committee chairman Bill Galvano said he thought the vote would "send a strong message" to the governor about the chamber's displeasure with the terms. Earlier this week, Senate President Jeff Atwater was skeptical about the likelihood of a compact passing this session.

Crist said Friday that he is "confident" nonetheless that both chambers will approve an agreement with the tribe this year.

"The reason I feel that confidence is, I'm pretty certain that they have a keen sensitivity to the pari-mutuel industry in our state -- I think that's crystal clear. And I think what they're willing to do, sort-of reading between the lines, if you will, is some kind of a hybrid between a compact and helping the parimutuels industry in Florida. That's where the confidence comes from."

Democratic Rep. Ron Saunders, a former House budget chairman, said he liked much of what he sees in Crist's budget, such as renewed funding for Florida Forever, the state's popular, but pricey, land conservation program. But Saunders called it "very risky" to propose funding for core needs like teachers with revenues derived from an as-yet nonexistent compact.

"He's definitely putting himself at odds with Republican leadership," said Saunders, R-Key West.

Following Crist's early release of his education budget on Wednesday, Atwater described it as "optimistic" given the state's fiscal challenges. The governor's proposal not to lay off or cut salaries for state workers would likewise be "a high bar to clear" this year, the Senate president said.

The environment got renewed emphasis in Crist's budget plan, which includes $50 million in new bonding authority for Florida Forever. Lawmakers left the program on life support last spring, agreeing to continue keep the program afloat but denying any new spending. The governor also budgeted $50 million in bonding authority for Everglades restoration, and $10 million for solar energy rebates.

Asked how the state can afford all of Crist's proposals, McDaniel called it the "billion-dollar question," to which he said he has found the answers. In addition to federal help with Medicaid and revenues from the gaming compact, Crist is also calling on lawmakers to spend more than $500 million in state trust funds and other reserves.

That includes, he said, the Lawton Chiles Endowment Fund that supports programs for children and the elderly. Crist and lawmakers raided it to cover budget shortfalls twice in the past two years, leaving the once-$1.2 billion fund at less than $650 million. Crist is calling for a $230 million withdrawal this year to close the remaining budget gap.

Atwater and state House Speaker Larry Cretul said this week that they are open to the idea. But Durell Peaden, Senate Health and Human Services chairman, blasted the notion of using those dedicated funds on anything other than programs for children in need.

Peaden, R-Crestview, also criticized the governor's emphasis on the environment. "They ought to put that money where it needs to be -- on health care and education. They need to hold back on the environment. We've got too many problems right now."

Glance at the budget proposal

$69.2 billion total state spending, up from $66.5 billion this year

$28.4 billion for health and human services, including:

• $2.7 billion to cover increased Medicaid costs and enrollment

• $402.7 million to continue the Medically Needy program that supports low-income, chronically ill patients, including organ transplant recipients

• $50.5 million in additional funding for KidCare, the government-subsidized health insurance for children

• $25.8 million subsidies to support families adopting children in state custody

$32 billion in combined local, state and tuition funds for education, including:

• $179 increase in spending per K-12 student, for an average of $7,045 each

• $57.1 million in bonuses for nationally certified teachers, a $10.2 million increase

• $3.6 billion for state universities, a $100 million increase

• $2 billion for community colleges, a $67 million increase

$6.7 billion for transportation

$5.2 billion for public safety, including:

• $2.4 billion for prisons

• $608.4 million for juvenile justice

• $460 million for state courts

$2.1 billion for environmental programs, including:

• $50 million for Everglades restoration

• $50 million for Florida Forever

• $167.6 million for clean water supply

• $10 million for solar energy rebates

In addition, Crist is calling for:

• a corporate income tax cut valued at $57.4 million

• a 10-day, back-to-school sales tax holiday

• delaying unemployment compensation tax increases on businesses. The tax is scheduled to rise this year from $8.40 to more than $100 per employee, due to sharp rises in layoffs and unemployment.