BRADENTON, Fla. — Faced with falling revenues, Florida Gov. Charlie Crist yesterday unveiled a $70 billion fiscal 2009 budget plan that taps reserves and relies on non-recurring funds for recurring programs, as well as funds from a tribal compact that is currently in a legal dispute.
Crist also proposed authorizing more than $2 billion in new debt, including issuance of the state’s first grant anticipation revenue vehicles bonds, or Garvees.
Last May, Crist signed his first budget bill into law, authorizing a $71.5 billion budget for fiscal 2008 that included $3.26 billion of debt spending and $7 billion in reserve, which represented some of the highest reserves held by a state. But revenues supporting the current budget and the fiscal 2009 budget have dropped by several billion, mostly because of declines in the real estate market and economy.
The proposed 2009 budget culls $1.1 billion from various reserves, including $33.7 million from the budget stabilization account. But even with those withdrawals, Crist’s budget still has total reserves of $4.5 billion.
It also relies on $900 million of non-recurring funds for recurring expenses, which represents 3.2% of expenditures, as well as income from the compact Crist negotiated with the Seminole Tribe in November. His authority to unilaterally negotiate the compact is being challenged by the Legislature. The Florida Supreme Court heard arguments in that case on Wednesday.
Crist said his budget was designed to stimulate the economy while providing an additional $1 billion for K-12 schools. It also provides bond financing for environmental programs and provides $60 million to encourage investment in desalination and reuse of wastewater.
If Crist’s recommendation is approved by the Legislature, next year’s budget would authorize the most debt spending for education. Crist proposes issuing $1.16 billion of public education capital outlay bonds for public schools and colleges and another $50 million of bonds under the school and community college district capital outlay program.
The budget proposes $151.8 million of debt for right of way acquisition, $423.2 million for the Florida Turnpike program, and $50.7 million of Garvees. It includes $101.2 million of bonds for the State Infrastructure Bank, $300 million of debt for the Florida Forever environmental bond program, and $100 million for the Comprehensive Everglades Restoration Plan.
Portions of Crist’s budget face an uphill battle, said Florida House Budget and Policy Council chairman Ray Sansom, R-Destin.
“Less than two years ago, the people of Florida voted and told their state leaders to practice fiscal responsibility and not balance the state’s budget using one-time and non-recurring dollars,” Sansom said in a statement.
Sansom said some House members have “committed to not borrow or bond ourselves out of this situation because we refuse to take the easy way out and pass these tough decisions onto future state leaders.”
Crist, an ardent supporter of the Amendment 1 statewide referendum that passed on Tuesday, said the tax relief package would save Florida taxpayers $9.3 billion over five years and ultimately would help stimulate the state’s economy and revenues.
Although Crist’s budget includes $138 million for school districts and $26.2 million for fiscally constrained county governments to offset impacts from Amendment 1, Fitch Ratings warned yesterday that tax relief and other events could reduce local governments’ financial flexibility and affect credit quality.
“Fitch will continue to evaluate the impact of these developments on credit quality and will take rating action if circumstances warrant,” the agency said in a statement.
The Florida Legislature begins its session March 4.