The House Appropriations Committee pondered Gov. Rick Scotts proposed budget Thursday afternoon and began the long, difficult process of crafting a budget despite a large shortfall.
We all know about the serious challenges we face, said Denise Grimsley, R-Sebring, the chairwoman of the committee, specifically noting the $4.6 billion shortfall the legislators face when they convene in March.
JoAnne Leznoff, the staff director for the committee, offeredlegislators a stark reminder of the coming shortfalls as she guided the committee members through the numbers, offering a recap of the states fiscal situation. Leznoff offered a presentation showing shortfalls of $4.62 billion in FY 2011-12, $4.56 billion in FY 2012-13 and $3.56 billion for FY 2013-14, and broke down the spending from general revenue and state trust funds
This shortfall is significant, its very significant, said Grimsley who called the Legislatures task of crafting a constitutionally mandated state budget challenging.
Jerry McDaniel, the director of Scotts Office of Policy and Budget, and his team presented and defended the governors proposed budget, arguing that it will help revive Floridas sluggish economy and continuing high unemployment.
He is on a mission to create jobs with this budget, insisted McDaniel, pointing to Scotts inaugural address and his speech on Monday when he unveiled the budget.
McDaniel offered a gloomy take on Floridas economy. He focused on unemployment, noting that the state has the third highest rate in the nation and will remain above 10 percent until at least 2013. McDaniel also noted that the Sunshine States net migration was not at levels it had been a decade ago, though he expressed optimism that those numbers would improve as the national economy recovered.
Scotts budget proposal calls for reducing the $70.5 billion budget passed for FY 2010-11 to $65.9 for FY 2011-12 and to $63.3 billion in FY 2012-13, the smallest the budget has been since FY 2004-05 when it stood at $59 billion.
Its an almost 10 percent reduction of where we are now, said McDaniel, referring to the FY 2012-13 proposed budget.
Noting that the number of state employees peaked in FY 2009-10 with 128,131 before dropping to 126,765 in FY 2010-11, McDaniel said the Scott budget proposals would reduce that number by more than 10 percent. The Scott budget would lower the number of state workers to 118,087 in FY 2011-12 and then to 113,981 in FY 2012-13.
McDaniel repeated pledges Scott made during the campaign to use accountability budgeting, reduce spending, reform regulations, promote jobs, reduce property taxes and end the corporate income tax while keeping the state education system competitive in the global and national marketplace by increasing school choice opportunities.
McDaniel conceded that the state would lower funding per student by 10 percent, more than $703 per student. However, McDaniel countered, school districts would save considerably if pension plans are reformed by having employees pay into their own retirement systems. With these savings, McDaniel argued the state was spending just less than $299 per student from last year, a reduction of 4.33 percent.
Weighing in on Scotts proposal to eliminate the corporate income tax, McDaniel said the plan was to reduce the rate from 5.5 percent to 3 percent in FY 2011-12, lowering it by 0.5 percent each year until it was phased out altogether.
Noting that the governor wanted to cap Medicaid spending at FY 2011-12 levels, McDaniel said that the governor did have a Medicaid reform proposal of his own but would work with the Senate and House on the matter. Left unchecked, this will consume more than half the state budget, said McDaniel.
McDaniel also noted Scotts proposal to have state workers contribute up to 5 percent of their salaries into their pension plans, bringing their retirement plans more into those of employees in the private sector.
The Scott plan calls for $4.1 billion in tax relief over the next two years by reducing the corporate taxes, local efforts, unemployment compensation taxes, extending the water management district tax holidays and motor vehicle and highway fees. According to McDaniel, this will save each household in the Sunshine State $540 in the next two years.
Asked by Grimsley about the Scott plan to move monies from established trust funds over to the general revenue, McDaniel said that the Scott team looked at the more than 300 funds and looked at the legal obligations.
Democrats on the committee took shots at aspects of the budget as they questioned McDaniel on the details.
The governor recommended the budget cut 8,000 jobs, said Charles Chestnut, D-Gainesville, who asked McDaniel about whether the budget changes would impact jobs in the private sector. While McDaniel said no, Chestnut followed up by asking if the drastic cuts in the state university and college system would impact Floridians looking to get back to work. McDaniel insisted that Scott would have liked to fund higher education institutions more, but the funds simply were not available.
Democratic Leader Pro Tempore Joe Gibbons of Pembroke Park also went after Scotts and McDaniels characterization of the proposal as a jobs budget, noting that it would reduce the number of state employees. McDaniel answered that the Scott administration believed the state could only recover with an expansion of jobs in the private sector.
House Democratic Leader Ron Saunders of Key West ripped into the Scott plan, saying he was excited about the property tax reduction but that was offset by the mandatory pension contributions which he compared to an income tax for teachers and other employees. Its based solely on income, said Saunders.
We dont see it as an income tax, replied McDaniel, who argued that the money stayed with the employees.
Saunders continued to pound away at Scotts budget, demanding what else besides reducing the corporate income tax would lure jobs to Florida. McDaniel replied the entire plan would attract new jobs to Florida.
I hear you say the governor wants innovative solutions, said Darryl Rouson, D-St. Petersburg, who asked if Scott was open to Internet sales taxes. McDaniel swatted down the question, insisting that the governor was opposed to all increased taxes. Rouson asked McDaniel to ask Scott about the issue and McDaniel said he would do so.
Marty Kiar, D-Parkland, ripped into Scotts proposal for large cuts to education and hammered the administration for not getting input from school districts across the state.
Legislators from both sides of the aisle questioned McDaniel on issues ranging from funding historically black colleges to courts to moving monies in specific trust funds into general revenue.
There were certain decisions that were very hard, noted McDaniel. Youre going to be tasked with difficult decisions with limited resources.
Republicans on the committee expressed concerns over certain aspects of the proposed budget.
The budget that the governor proposed doesnt conform to the budget that we have today, said Ed Hooper, R-Clearwater, who asked McDaniel how long it would take to gel the old budget format to the new one that Scott embraced.
There was some praise for the proposed budget from the Republicans, who control 81 of the 120 seats in the House.
I, for one, am excited to be working with you in reducing the size and scope of the state government, said Seth McKeel, R-Lakeland.
The governor has some interesting ideas, said Grimsley, who promised that the committee would consider Scotts proposal.
Grimsley noted that the House appropriation subcommittees would start crafting the budget next week through exercises.
Reach Kevin Derby at kderby@sunshinestatenews.com or at (850) 727-0859.
