Florida lawmakers weigh end of stimulus money

 As lawmakers grapple with a shortfall for the coming fiscal year that could total as much as $2.7 billion, there’s another financial headache looming on the horizon:

The pending expiration of the federal stimulus money that the state used to patch holes in its $66.5 billion spending plan for the current spending year.

In education alone, that could cost the state more than $1.2 billion in education funding in the 2011-12 spending year, blowing a larger hole in an already stretched education budget.

That’s on top of other areas where a far-from-robust economy is still expected to hamper tax revenues, with the result being a shortfall as high as $5.4 billion.

Many lawmakers in both parties still insist that it wasn’t a mistake to take the stimulus funding, if for no other reason than to buy the state time to figure out how to deal with wrenching decisions on the budget for education and other needs.

“At this stage of the game, I don’t think we had any choice,” said Sen. Steve Wise, R-Jacksonville, who chairs the committee overseeing public education spending. “It delays the inevitable.”

But the inevitable is drawing increasingly close.

Even without the stimulus money “flameout,” the budget is already in rough shape. Tax revenues have continued to decline, forcing lawmakers to slash billions from the spending plan over the last several years. The stimulus funds and an increase in the state tobacco tax actually helped avoid some of the more draconian cuts being considered during last spring’s legislative session in an effort to make sure the Legislature met its constitutional requirement to pass a balanced budget.

Those economic conditions are still punishing the state’s wallet.

“We’re going to be facing a deficit of a considerable amount this year,” said Rep. Charles McBurney, R-Jacksonville and vice chairman of the Criminal and Civil Justice Appropriations Committee.

Simply meeting “critical needs,” essentially the natural growth in state programs, would cause a budget hole of more than $900 million in the coming fiscal year, which begins July 1, and $2.3 billion in 2011-12.

Adding other high-priority items would bump that number up to early $2.7 billion next budget year and $5.4 billion in 2011-12, when the stimulus money runs out.

“We will be in severe problems,” said Senate Higher Educations Appropriations Chairwoman Evelyn Lynn, R-Ormond Beach. “I don’t know how we can take care of priorities.”
 
An economic turn?
At least part of the rationale Gov. Charlie Crist and others gave for taking the stimulus was that it would help keep the state’s budget afloat until the economy turned around. Asked if the governor still believed that to be the case, Press Secretary Sterling Ivey said in an e-mail: “The governor continues to believe that brighter days are ahead for our state. I have not heard him say anything to the contrary.”

Crist’s comments in the run-up to the stimulus passing Congress have become an issue in the GOP primary for U.S. Senate, with former House Speaker Marco Rubio and Crist trading accusations over whether Crist endorsed the stimulus, a measure pressed by President Barack Obama and deeply unpopular with the Republican base.

But Rep. Audrey Gibson, D-Jacksonville, said the stimulus money was supposed to be used for more than simply plugging holes.

“The states had to strategically manage the money so that when they got to the other side of the bridge, they would at least be on the way to being whole,” said Gibson, a member of the Transportation and Economic Development Appropriations Committee.

For example, the state should focus more on several short-term transportation construction projects that would get money flowing into the economy more quickly than using the funds to bankroll longer-term plans.

In the meantime, while state projections show revenue growing in the future, it isn’t expected to keep up with funding needs.
 
The right move?
For Rep. Jennifer Carroll, R-Fleming Island, that was always the danger in taking the stimulus money and using it to plug budget holes.

“Then, when the money runs out and we have to generate the revenue or make up the difference, we’re going to be worse off,” she said.

But lawmakers largely say they still believe the state should have taken the money — both to help the immediate crisis in the state budget and for the more practical reason of ensuring that Florida taxpayers got their fair share.

“Once the stimulus package had passed the Congress, then I think we should have accepted the sums. ... That money would have probably gone somewhere else,” McBurney said.

Now the challenge is to try to find some way to manage the fallout.

Lawmakers say the state should look at new ways to stimulate the economy or find new revenues. Wise is mulling whether voters should be allowed to decide whether to increase the sales tax by one cent to fund education, an idea that gained little traction last year.

“Obviously, we can’t wait until 2011 to figure out what to do,” Gibson said, “and so we’re going to have to be forward-looking [about] where our needs are going to be.”