Legislature opens session Tuesday looking at budget shortfall

Heading into a third straight year of budget cutting, state Rep. Bill Galvano says he feels as if he's playing an old-fashioned pegboard game.

Just as jumping and removing pegs from the board becomes harder with every turn, "it's getting tougher and tougher every time to resolve all of our budget questions with the amount of money available to us," said Galvano, R-Bradenton. "It'll be very difficult, and some very hard decisions will have to be made."

Those decisions promise to dominate the upcoming session in which lawmakers will struggle to come up with ways to fill a budget shortfall that could exceed $3 billion next fiscal year.

Cuts to health care. Cuts to prisons. Cuts to universities.

Like it or not, every part of the now-$66.7 billion budget will probably suffer, said Rep. Will Weatherford, R-Wesley Chapel.

On the bright side, he said, lawmakers have learned more about cost savings and demand greater efficiency from government. "This isn't our first rodeo."

But this isn't going to be like last year, either.

In 2009, lawmakers used federal stimulus money, raised the state cigarette tax and increased state user fees by $1 billion to stem some of the bleeding from core spending areas, including education.

But the stimulus money starts running out next year, leaving deep cuts as the main option for staving off a deficit. Plus, 2010 is an election year, and no one in House or Senate leadership is interested in raising a single fee or tax, especially when the electorate is struggling with high unemployment and foreclosure rates.

Still, said Sen. Charlie Justice, D-St. Petersburg, "It's shortsighted to draw a line in the sand and not leave yourself some options to meet the needs of people in Florida."

Subject to interpretation?

There are some bright spots this spring, as Gov. Charlie Crist has argued. For the first time since he took office in 2007, state revenue is rising. The state's economic analysts have predicted that Florida will take in $2 billion more next fiscal year than this year.

That does not, however, make up for the dramatic expansion of the state's Medicaid rolls, which have increased along with skyrocketing unemployment and foreclosure rates. Rising costs in Medicaid and other programs are creating a shortfall in the 2010-11 budget that could exceed $3 billion.

The governor has built three assumptions into his budget proposal: using more of the state's reserves, counting on Congress to provide emergency funding for Medicaid and assuming lawmakers will approve a gaming compact with the Seminole tribe, making $433 million in set-aside and upcoming payments by the tribe available in 2010-11.

Crist's budget includes a $535 million increase in school funding. It also restores the Florida Forever land conservation program, as well as the state's 10-day sales tax holiday on school supplies. All told, his plan adds $3 billion to current spending, for a total of $69.2 billion.

"The governor's budget is based on revenues that are not sure things," said Weatherford, who has been designated by his peer lawmakers as a future House Speaker. "We have to use the numbers we've got, and our numbers say we're $3 billion short."

Senate President Jeff Atwater and House Speaker Larry Cretul have rejected the governor's proposal to leave only $250 million in the budget reserve, saying that could jeopardize the state's bond rating.

Neither is willing to build a budget based on an assumption that a gridlocked Congress will provide Medicaid relief in time this year, either. Although there appears to be substantial support on Capitol Hill to aid states, the U.S. Senate axed the provision from its jobs bill. Federal health care legislation, in which the provision also appears, is stalled.

The gaming compact that Crist signed with the Seminoles last year deviates from the terms the Legislature approved. At the time, House lawmakers warned they would not tolerate substantive changes to those terms, sent to Crist for use in forging a final agreement with the tribe. But Crist's compact would give the tribe more rights to gaming than lawmakers approved and, so far, they have shown no willingness to yield to the changes.

Galvano, who leads the House's committee on gaming, said the House recently re-entered compact discussions with the tribe.

Last week, Galvano said he was "optimistic" that an agreement could be reached as early as spring. But many difficult details remain to be worked out, particularly concerning the tribe's exclusive rights to offer certain games.

Facing a projected $5 billion shortfall in 2011-12, the Legislature has no choice but to cut next year's budget, said Rep. Rich Glorioso, who oversees the House transportation budget committee.

"We have to cut this year - or else that gets even bigger," said Glorioso, R-Plant City. "It's going to be very difficult, but that's going to be our focus."

That's not enough, said Sen. Arthenia Joyner, D-Tampa, who also wants GOP leaders to reconsider tax reforms, including lifting sales tax exemptions.

Lawmakers have to consider new revenue when the most basic needs of vulnerable residents are at stake, she said.

"We just need to bite the bullet and do what we're elected to do and make the hard decisions - election year, or not," she said.

Vulnerable to cuts

Education and health are budget areas most vulnerable to heavy cuts. They rely more than any other programs on annual tax revenue. They are also the two largest areas of state spending.

The Senate panel in charge of budgeting for health and human services has instructed those agencies identify ways to reduce spending by 15 percent. Among the options: halting coverage of medical care for low-income pregnant women who are not poor enough to qualify normally for Medicaid, eliminating money to fight homelessness and slashing money for services that help people with developmental disabilities.

Don Winstead, deputy secretary for the state Department of Children and Families, said his agency cannot come up with a 15 percent plan for cuts that doesn't threaten human safety or break agreements with the federal government. The most DCF can offer at this point, he said, is a 7.8 percent reduction, which would carve deeply into services such as mental health and substance abuse treatment.

"We identified pretty significant cuts that we wouldn't feel good about at all," he said. "We aren't recommending them."

Sen. Nan Rich, vice chairwoman of the Senate's health and human services budget committee, said she is bracing for the worst.

"Somehow, it seems to be expected that health and human services will have to take the brunt of the deficit reduction," she said. "As far as I'm concerned, it's just not acceptable."

It's also shortsighted, she added, because state dollars spent on health programs such as KidCare and Medicaid receive federal matching dollars. Shorting those programs "is inefficient and totally inhumane," she said.

Crist's arguably rosy budget for education includes a $100 million increase for state universities and a $67 million increase for community colleges, without a tuition increase. He is proposing a 2.6 percent boost in per-student funding for public schools, which translates into a $179 increase per student, on average.

"To be truthful, I don't see that as being a possibility," said Weatherford, who oversees a House education policy committee and sits on a school budget panel.

But a cut to school funding would mean more personnel layoffs, said Mark Pudlow, spokesman for the state teachers union.

"Right now, we're down to the bone," he said. "And there's legislation out there now for higher standards and new testing. That costs money."

Crist's version requires counties to impose what had been an optional property tax next year for schools, if they have not already.

Lawmakers approved the optional tax increase last year. But about two dozen counties, including Hillsborough and Pasco, chose not to levy it. Some lawmakers say they are reluctant to mandate what would feel like a new tax increase for those counties.