Legislature Passes $512 in Budget Cuts, More Coming
Filed Under: Politics
Florida’s deteriorating fiscal condition took center stage again this week. The state’s Consensus Estimating Conference revised its forecast of Florida’s general revenue collections and the economists reduced their revenue estimates for FY 2007-08 and FY 2008-09 by a combined $2.945 billion–$1 billion in the current year and $2 billion for next year.
The $27.5 billion estimate lawmakers based the current year’s budget on has now been reduced three times by a little more than $1 billion each time. Revenue estimates for the upcoming budget are now $4.6 billion less than they were a year ago. Collections next year are expected to increase a scant $110 million from the current year.
On Wednesday, the Legislature approved $512 million in cuts that it had developed before the new estimates. This is on top of $1 billion already cut last fall.
Education bore the brunt of the cuts; about $346 million - including $234 million of which was expected to help pay for the day-to-day operations of public schools. The two rounds of cuts have cost public schools $460 million, but per-student spending is still 4.5% higher than last year. Social services will lose $37 million and the state court system will lose $48 million, though no layoffs or unpaid furloughs of court workers are expected. This was avoided by allowing prosecutors and public defenders to tap into revenues from court fines and fees.
Many Democrats voted against the cuts, urging the use of reserves to balance the budget. This approach was wisely avoided, however, leadership has stated it will not cut the current budget again, but will use the working capital fund (unspent, non-recurring GR) to cover the new $1 billion shortfall. The Governor signed the budget cuts today.
The budget cuts were given to members on Sunday, starting the 72-hour constitutional waiting period before they can be voted on. A vote is expected on Wednesday.
Attention now turns to the new budget. The House is considering a freeze on annual Medicaid increases that could save $340 million next year. Senate President Ken Pruitt said he expects lawmakers to eliminate a $316 million Medicaid rate increase planned to take effect July 1 for hospitals, nursing homes and some other health providers.
Nursing homes lose another $139 million next year after being cut $75 million earlier this year.
Taxes and Gambling Revenues
House Speaker Rubio and Senate President Pruitt have ruled out tax increases, but the Senate is considering gambling revenues and possibly tuition increases and fee hikes.
The Senate has given preliminary approval to a pair of bills to raise revenue by expanding gambling. SB 1380 would allow the addition of thousands of electronic gambling machines, similar to slot machines, at greyhound tracks, horse tracks and jai-alai frontons. This could raise up to $500 million. The Speaker has said flatly the House will not pass that bill. Another bill (SB 970) would lower the tax rate for casinos at Miami-Dade and Broward pari-mutuels to 35 percent from the current 50 percent. Supporters say this would allow casinos to invest more money in their facilities to attract more players.
A number of bills look to “level the playing field,” including HJR 7005 and SJR 2234 would remove the presumption of correctness from the property appraiser in property tax assessment disputes. HB 1283 employs an approach supported by Florida TaxWatch to reduce the burden of proof on the taxpayer to a preponderance of the evidence. This bill was schedule for a workshop this week, but it was not discussed.
HB 111 cleared the Economic Development Committee this week.
The House Insurance Committee passed HB 983 unanimously to make the state-run Citizens Property Insurance more competitive with the private market in addition to taking on more storm reinsurance risk. The bill would create a new windstorm-coverage program that would base its rates more closely on the actual risk and caps the total amount of a claim. This could supplement private coverage, and the 1.3 million Citizens policyholders would be put into the program.The state’s hurricane catastrophe fund would also be limited to offering re-insurance for about $3 billion in commercial and condo property, instead of the current $28 billion in reinsurance coverage for residential risk.The Governor and Senate President do not want to retreat from last year’s decision to use the catastrophe fund to pay claims. That decision has lowered premiums but makes all policyholders liable for big assessment increases in the event of a big hurricane.At the request of the House leadership, Florida TaxWatch testified today at a workshop of the Committee on Insurance. Dr. David Letson, a member of the Florida TaxWatch Council of Economic Advisors, assessed the fiscal impact on state in the event of a major storm that depletes the catastrophe fund.
The Senate advanced its proposed Constitutional amendment (SJR 2308) returning the Office of Commissioner of Education to an elected post, replacing the appointed State Board of Education with the Cabinet and clarifying that the Legislature, not the Board of Governors, will decide state university funding. The measure cleared its second committee this week and now goes to the floor. This measure has bipartisan support in the Senate. The House version (HJR 7025) has strong support of the leadership.The House also worked further on developing a plan to grant school districts some flexibility in their efforts to meet the Constitutional class-size requirements in 2010-2011. No bill has been presented as yet; however, representatives of education organizations have come away from workshop discussions cautiously optimistic that something can be developed that will be acceptable to all.House and Senate leadership are also supporting an upgrade of the Corporate Profits Tax Scholarship Program. HB 653 has passed the Schools & Learning Council and is now in Policy & Budget.
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