Florida has whacked its budget by $7 billion over the past three years. That's not just slower growth; that's a real decrease in spending.
Has Tallahassee cut all it can? Gov. Charlie Crist apparently thinks so,because he proposes a $2.7 billion hike this year.
But, where the governor sees an uptick in revenues, others see rising costs and a shrinking economic base that make an overall spending increase impossible.
"The governor based his budget on December numbers that are no longer valid," says Sen. Don Gaetz, R-Niceville. "We have many more people unemployed and fewer people contributing to the coffers."
House Speaker Larry Cretul, R-Ocala, and Senate President Jeff Atwater, R-North Palm Beach, have pledged that the Legislature will live within its means. That means cuts will have to be made.
Containing costs in the two biggest areas -- education and Medicaid -- will be crucial, since they constitute roughly two-thirds of state spending. But, the remaining third of the budget offers potential areas of economy, too.
Florida TaxWatch weighed in this month with a list of more than $2 billion in budget cuts and revenue enhancements that don't even touch K-12 and Medicaid.
Among them:
- Increase the use of state term contracts for selected goods and services. (Estimated first-year savings: $200 million.) "Florida statutes require state agencies to pursue the procurement of goods and services through state term contracts, when available. However, there is little assurance that state agencies fully comply with this requirement," TaxWatch states.
- Re-negotiate non-client-service contracts, such as those for internal or administrative purposes. "Potential rate reductions of 5 percent are not unreasonable, given the current economic climate" ($215 million).
- Stop waiving penalties for late corporate filing fees ($37.8 million).
- Index tolls on the Turnpike to inflation ($49.9 million). This is mandated by state law, but hasnt been implemented yet.
- Dispose of unneeded state facilities and land holdings ($43 million).
- Expand alternative sentencing programs for drug violators to reduce prison costs. Changing "simple possession" for marijuana from a felony to a misdemeanor would save an estimated $10.4 million in incarceration expenses.
By far, the biggest driver of state spending is personnel. And, employee unions representing 55,000 state workers said they were "elated" that Crist's budget didn't ask them to share in the budgetary sacrifice. The governor's spending plan envisions no layoffs of state workers and no increase in insurance premiums.
Critics say Crist missed an opportunity to give state government a dose of market reality.
TaxWatch estimates that cost-sharing arrangements for health insurance would save the state $160 million a year.
"State health plans utilize a co-payment, which is a set fee per doctors office visit or other transaction, paid by the employee. It does not incentivize beneficiaries to behave like rational consumers, because it removes their financial stake in cost-benefit decisions related to medical treatment," TaxWatch says.
"By changing to co-insurance (such as an 80-20 or 70-30 split between government and worker), people are more aware of costs, and the hope is that they'll be more careful about how they spend their health-care dollars."
Similarly, TaxWatch advocates requiring all classes of state employees to pay the same premiums for health insurance, which would generate a savings of $46 million annually.
"While most state employees pay a monthly premium for their state-subsidized insurance coverage ($50 per month for individual policies and $180 per month for family coverage), more than 30,000 workers pay no premiums at all, including nearly all of the governors staff, the 160 legislators, 1,800 legislative employees, senior exempt service and senior management service employees."
Also on the personnel front, TaxWatch recommends reducing the Florida Retirement System employer contribution rate by requiring employee contributions for new hires ($255 million) and changing the 3 percent automatic cost-of-living adjustment increases for at least future pension recipients and tie it to inflation with a 3 percent ceiling instead ($150 million).
House Speaker Cretul supports the cost-sharing concept of offering state employees a deeper choice of health benefit plans, but requiring workers to pay more.
While acknowledging that "the low-hanging budgetary fruit has already been picked," Cretul seeks to impose cuts to transportation, environmental spending and social programs.
He says he is looking for efficiencies in the state's management of various auto and truck fleets, perhaps resulting in a merger of those operations into a single entity.
But, Cretul would also balance the general fund books by pulling up to $5 billion out of trust funds.
This is a bad idea in at least one case, says the Florida Home Builders Association and the Florida Association of Realtors.
The two groups say the state is pennywise and pound foolish to cap the Sadowski housing trust fund. It would be fiscally irresponsible to continue raiding it.
"At a time when our real estate and construction markets are still reeling from excess inventory, there is no better use for these trust fund dollars than to be spent on their intended purpose helping low income families and seniors with down payment assistance so they may have their chance at the American Dream of homeownership and reducing the states housing inventory at the same time," the FHBA said in a statement.
The association estimates that for every $1 million the state spends on affordable housing programs, it receives $7.66 million of economic impact and realizes 77 jobs created.
"Appropriating the $174.7 million currently available would generate 13,452 jobs and $1.338 billion in economic activity," the FHBA stated.
Senate Democratic Leader Al Lawson says the GOP-dominated Legislature is only selectively economical.
He condemns Republicans for giving out more than $11 billion in corporate tax breaks over the last eight years while doing little to help poor Floridians.
"All our focus has been over the last several years on corporate America and on the business community. But, that still hasn't solved the needs of poor people in this state," said Lawson, D-Tallahassee.
Gaetz acknowledges that some of the business incentive programs need to be updated and modernized.
"We have 13 economic development programs, all created before the economic boom. It's important to reward the job creators," he said.
Gaetz said one alternative being offered to the film industry would remunerate the state directly by sharing a portion of filmmakers' net revenues in Florida.
In the public sector, Gaetz's SB 2534 would give local governments feeling a pinch the option of sharing with other entities such back-office services as human resources, accounting, purchasing and technology.
Florida Trend recently cited statistics that suggest further budget reductions would be cutting into the bone and sinew of state operations.
"Forty-seven states have more government workers per capita than Florida," wrote executive editor Mark Howard.
Howard also reported that Florida has the lowest payroll cost per taxpayer at $36 (vs. the U.S. average of $56).
"The inconvenient truth is that Florida is pretty efficient already," he states.
"Government may not create wealth, but it sure as heck helps, since the way it spends has a great deal to do with how well goods and services move around and the quality of the workforce that's available to business," Howard said.
Still, GOP lawmakers -- and even some Democrats -- believe more savings can and must be achieved.
Chief Financial Officer Alex Sink, a Democrat running for governor, this month implemented a streamlining of middle management in her agency, which, if adopted statewide, could save up to $277 million a year.
Sink said that as agency managers resign or retire, the positions will be eliminated, and the structure will be re-engineered using existing staff. Achieving a 7:1 employee-to-manager ratio will put her department in line with best business practices and save an estimated $8 million to $10 million annually, Sink figures.
Government efficiency doesn't have to be an oxymoron -- not if you take a businesslike approach to managing our state, the former Bank of America executive says.
Too often in government, the rule seems to be bigger is better, but in business, I learned that smarter is better. By streamlining middle management, we can make government more efficient, more effective and save millions of taxpayer dollars.
On a more micro-managerial level, Sink recently called on state government to stop purchasing any non-mission critical office supplies, an effort that could save the state more than $14 million a year.
Her search for savings even extended to paper clips at the Department of Financial Services.
Forming a task force to inventory office supplies and find ways to reduce costs, the panel found that certain purchases could be stemmed for years through better sharing of supplies. For example, the department inventoried 537 pounds of paper clips, 37,601 binder clips and 17,425 pens.
According to the Legislatures new Transparency Florida Web site, state agencies spent $46.9 million on consumable office supplies last fiscal year.
