State Lawmakers Vote To Pull $672 Million From Reserves

A select panel of lawmakers tapped $672 million from a reserve fund this week, but Florida is still facing a potential budget deficit that could force the Legislature into special session after the November election.

The Legislative Budget Commission unanimously approved the transfer Wednesday recommended by Gov. Charlie Crist.

It falls $795 million short of filling a projected $1.47 billion hole in the budget for the current fiscal year that ends June 30, 2009. Even bigger gaps are predicted for the next three years by a long-range outlook the panel also approved.

The Florida Constitution prohibits budget deficits, but the commission agreed with Crist, who wants to delay any further action until after state economists update their revenue forecast in November.

The deficit in the $66 billion budget has been caused by lower-than-expected tax and revenue collections blamed on Florida's sputtering economy.

"With the economy in the condition it's in, I think it's better to make these decisions methodically and not all at one time," said House Policy and Budget Chairman Ray Sansom, R-Destin.

Sansom, a member of the commission and in line to become House speaker in November, said it's too early to make spending decisions for the latter part of the fiscal year or to tell whether a special session will be needed to balance the budget.

Any permanent spending cuts would require legislative approval. Lawmakers have cut state spending by about $6 billion over the past year, including reductions to last year's budget made during a special session in October.

The commission agreed to apply half of the state's $1.3 billion budget stabilization fund to offset the deficit. That's the maximum the governor and commission can take out of the fund on their own.

They also could borrow up to $1 billion from the Lawton Chiles Endowment, which invests money from the state's huge tobacco settlement for future use on children's and health programs.

Crist, though, did not ask for any of the Chiles money. He's hoping to make up the rest of the deficit in other ways including a 4 percent spending holdback he ordered for executive branch agencies in June.

That could save nearly $900 million if all agencies withhold the full amount. Crist's budget director, Jerry McDaniel, told the commission the actual figure may be no more than $300 million. That's because many programs such as Medicaid or prisons cannot be cut without violating laws and court orders or losing millions in federal matching money.

"That level of reduction could not be accomplished responsibly, but it does nonetheless provide another tool, another option," McDaniel said.

Amy Baker, the Legislature's chief economist, told the commission the state is facing "a structural imbalance" because it's spending needs are increasing faster than its revenue.

"I would rather say we have a dysfunctional taxing system," said Sen. Nan Rich, D-Weston. "I don't think that we can balance the budget in the future just on continuing to reduce spending and leave our kids unsafe or uneducated."