EDITOR'S NOTE:
From education and Medicaid, to personnel and paper clips, ideas for shaping and reforming Florida's state budget are examined in this five-part Sunshine State News series.
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Staring down a $3 billion deficit, Florida lawmakers have three basic options:
* Adopt Gov. Charlie Crist's budget, which contains $2.7 billion in additional spending.
* Raid trust funds and make across-the-board cuts.
* Wring out more efficiencies with targeted spending reductions to build a $1 billion reserve.
Since there is absolutely no appetite for tax increases in this election year, the Crist plan may seem the least onerous option. But, Republican leaders in the Legislature doubt that Crist's numbers will add up.
"We're not going to base our budget on a wink and a prayer," said House Speaker Larry Cretul, R-Ocala, in a direct slap at the governor's bet-on-the-come budget.
With its reliance on $4 billion in stimulus money, Crist's spending plan threatens to leave a huge unfunded hole when stimulus money runs out in 2012.
Even Crist said "we hope" the reliance on stimulus money doesn't leave future legislators "in a bad way."
Last year, lawmakers balanced the budget using $2.2 billion in new fees and taxes and $5 billion in federal stimulus money.
This year, with the economy continuing to lag, GOP leaders say they want to live within the fiscal estimates.
That's good news for businesses, says Amy Baker, director of the Office of Economic and Demographic Research.
"Living within the estimates provides continuity for the next year. That helps business," she said.
Cretul and Senate President Jeff Atwater, R-North Palm Beach, want to pursue a pro-business agenda that aims to reduce government regulation.
Unlike Washington, where budget "cuts" merely mean a slowdown in spending increases, Tallahassee takes a more realistic approach.
"The public is understanding of fiscal reality, and that's where states need to be these days," says Susan MacManus, professor of political science at the University of South Florida. "People would rather see everyone taking a hit than more political favoritism."
Seeing Florida's economic slump as an opportunity to instill discipline and efficiency in government, leading lawmakers say that perennial whining over yet another budget "crisis" won't get the job done. Nor will the kind of disconnected optimism that Crist conveyed in his sunny State-of-the-State address.
"We cannot tax, regulate or mandate our state into prosperity... I'm asking you to approach government in a new way," Cretul said to the applause of the GOP-controlled House.
Cretul's vision of a "high-performance government" is shared by state Sen. Don Gaetz, R-Niceville, who said, "Undeniably, deep cuts must be made.
"But, we have to go beyond the idea of simple, across-the-board cuts. Doing that just makes a weaker system."
Instead, Republican leaders and even a few Democrats, notably Chief Financial Officer and gubernatorial candidate Alex Sink, are looking for ways to selectively streamline government operations while lightening the regulatory burden on business.
From education and Medicaid (which account for roughly two-thirds of the state's budget) to personnel and paper clips, reform ideas will be examined in this five-part Sunshine State News series.
Baker says Florida's fiscal picture is dictated to a large extent by the U.S. economy.
"We're waiting for U.S. home sales to return, so that people can sell those houses (and move here)," she said.
Baker predicted that Florida's peak jobless rate could hit 12 percent this spring -- "the highest it's been since we've been keeping records."
She doesn't think the Florida economy will start to see anything like normal growth rates until the spring of 2011.
"We think we've hit bottom," she said. "We're going to be bumping along there for quite some time."
So, amid 1.2 million unemployed Floridians, a dead-in-the-water real-estate market and record home foreclosure rates, legislative leaders believe that a smaller, leaner budget is the only way to go.
Noting continued declines in property values (and tax collections), Cretul said it will be impossible "to avoid significant reductions in education services or programs." The speaker issued a similar warning on health and human services funding.
In an attempt to goose revenues, Crist's budget dedicates some $400 million from his Seminole casino compact to public schools. But, that figure is a mere pittance in a $22 billion education budget.
Though lawmakers have been cool to the Seminole deal, which requires legislative approval, gaming fever may yet erupt in Tallahassee.
Representatives from national gaming companies are trolling the hallways of the Legislature looking to expand, or usurp, the Seminole parlay. Pari-mutuels are also angling to expand their piece of the action through "racinos," a combination of tracks and casinos.
Las Vegas Sands last week proposed a $2 billion convention, trade show, vacation and gambling complex for South Florida.
If the state opens the door to non-tribal casino ventures, it could collect $1.5 billion just from selling gaming licenses, Baker said.
Skeptics say gaming is a fool's bet.
"Gambling has grown because it is less unpopular than other steps, like broad-based tax increases," says Robert Ward of the Rockefeller Institute of Government.
But, he notes that gaming revenue tends to grow more slowly than the cost for services, such as health care and education.
"Plugging the hole this way just pushes the problem down the road," Ward said.
For proof, critics look to casino-dependent Nevada, which has even worse bankruptcy and foreclosure rates than Florida.
Taking a more conservative approach, Cretul wants hold $1 billion aside as a rainy day reserve. The surplus has dwindled to just $130 million, exposing the state to a precarious financial gap and risking its bond rating.
The speaker also said lawmakers must brace for a $5 billion budget shortfall in 2011-12, when the federal stimulus dollars flame out."
Cretul -- who is term-limited and, in his words, "running for the front porch" -- pledges a comprehensive review of Florida laws to repeal any outdated or otherwise unnecessary statutes.
"It does Floridians little good for us to set policies to bring economic growth back to Florida if state agencies are going to hinder those efforts with bureaucracy and red tape," he said.
Business leaders wholeheartedly agree.
Barney Bishop, president of Associated Industries of Florida, said the Legislature's key job is to see that "no taxes go to business and to adopt a regulatory philosophy that does not burden business."
Mark Wilson, president of the Florida Chamber of Commerce, noted that creeping regulation has turned the state from being "the fifth cheapest place to do business to the 19th most expensive."
Among its six priorities for the session, the chamber lists "business competitiveness" and reforming "government systems."
"The state is out of money. Jobs, jobs, jobs are the key to turning that around," Wilson said. And, he's not talking about government jobs.
"We have 26 state agencies. Is that the right number? Are there redundant regulations? It's not just about shrinking government. It's about reforming and reprioritizing what government does," Wilson said.
Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 224-2386.
