BRADENTON, Fla. — As the 60-day clock on Florida’s annual legislative session began running Tuesday, Gov. Rick Scott said his focus the past two years on reduced spending, paying down debt and creating jobs has worked.
“This is responsible stewardship of taxpayer money,” Scott told a joint session of lawmakers. “Washington, D.C., could learn a few budget lessons from Florida. The contrast between our state and the nation’s capital is remarkable.”
While focusing on his top priorities — removing the sales tax on manufacturing equipment and giving each public school teacher a $2,500 raise — the Republican governor didn't mention preparing the state budget for the potential impact of the federal sequester.
According to the advocacy group Florida-Teacher, the Sunshine state could lose more than $54 million in federal education funding this year.
“We have a projected budget surplus for the first time in six years,” Scott said. “Our challenges are different in this budget, but our goal is absolutely the same. That goal is economic growth and job creation.”
Scott has proposed a $74.2 billion budget for fiscal 2014, which relies on a small surplus. His total spending plan is $4 billion, which is 5.7% higher than the 2013 budget.
Though it’s the first year since fiscal 2009 that the state is not facing a deficit requiring steep cuts, the governor’s proposed budget does not sit well with his Tea Party supporters, and many lawmakers in the GOP-led Legislature.
Scott did not address overall budget numbers in his proposed spending plan Tuesday, but he said: “Now is not the time to turn back to the legacy of taxing and borrowing that crippled the economy we inherited two years ago.”
PolitiFact Florida, an investigative column examining “truth in politics” supported by the Tampa Bay Times and other publications, said Scott's assertion that a “legacy of taxing and borrowing” was the reason for Florida’s poor economy is false.
Fiscal experts and economists said the state’s real estate crash and the national recession — and their impacts on key sectors such as construction and tourism — were the “overwhelming causes” for the poor economy that Scott inherited, according to PolitiFact.
Florida has been one of the hardest-hit states from plummeting real estate values, and foreclosures, which exacerbated the recessionary impact on various revenue streams, including the state sales tax, which is a primary source of funding for the budget since Florida does not have a personal income tax.
Tighter revenues squeezed the state’s ability to issue new debt the past few years without surpassing its debt cap of 7%, which measures the ratio of debt service payments to the amount of available state revenues.
The state has exceeded the 7% cap but only because of dwindling revenues, according to the Florida’s Debt Affordability Report.
The latest debt report, published in December by the Division of Bond Finance, said there is no debt capacity available within the 7% policy cap until fiscal 2014 based upon current revenue projections and existing borrowing plans.
The slow recovery of state's revenues appears to be reflected in Scott’s 2014 budget proposal. He said the $27.1 billion general revenue fund reflects growth of 4.7% due largely to increased sales tax collections.
“After funding the state’s recurring expenditures of $24.6 billion, we have around $3.9 billion available to save or invest in our priorities,” he said while unveiling his priorities in early February, which spend most of the surplus revenue. His budget would place about $1.3 billion into reserves.
Scott also recommended the highest amount of new borrowing since taking office: $730 million of bonds for transportation-related projects.
In previous budgets, he recommended $217 million of bonding in 2013 and $331 million in 2012.
After spending considerable time in his state of the state address on family issues, education, and the need for business tax cuts to promote more job creation, Scott closed his speech by noting that while Florida led the unsuccessful legal fight to repeal the Obama administration’s Patient Protection and Affordable Care Act, he now supports expanding Medicaid under the act because it will be funded by the federal government.
“I concluded that for the three years the federal government is committed to paying 100% of the cost of new people in Medicaid, I cannot, in good conscience, deny the uninsured access to care,” he told lawmakers.
While the Senate is considering placing more than $2 billion in reserves to counter the uncertainty surrounding potential federal budget cuts, expansion of Medicaid is not a top priority for the majority of lawmakers though Democrats and some Republicans are supporters.
The House Select Committee on the Patient Protection and Affordable Care Act determined in pre-session meetings that expanding Medicaid is not in the state’s best interest.
It will be one of the most challenging questions facing lawmakers, House Speaker Will Weatherford, R-Wesley Chapel, said in a long opening session speech Tuesday.
“I am opposed to Medicaid expansion because I believe it crosses the line of the proper role of government,” he said. “I believe it forces Florida to expand a broken system that we have been battling Washington to fix, and I believe it will ultimately drive up the cost of health care.”
Weatherford called the expansion plan inflexible, and said it is not aimed at strengthening the core medical programs for the needy and elderly.
“The notion that we’re going to receive free money from the federal government is laughable,” he said.
“This is the same federal government that has not passed a budget in nearly four years. This is the same federal government that spends 1.2 trillion dollars more than it takes in every year. I am confident this House will make the best decision for our state.”
Though Scott has not pushed additional pension reform this year, it remains near the top of the legislative agenda in both chambers even after reforms several years ago that required employees to contribute 3% of their salaries and imposed other benefit reductions.
The state’s projected annual required contribution, which could be up to $500 million this year, is not sustainable, Weatherford said Tuesday.
“We’re going to have to keep writing that half-billion-dollar check for another 28 years to keep our so-called great pension system afloat,” he said. “It’s not rational.”
The House is considering a pension reform bill that would close down the existing defined-benefit plan and eventually move the systems’ 623,000 members into a 401(k)-type plan.
“Our plan is fair,” Weatherford told the House Tuesday. “Our plan is affordable. And our plan will ensure that we won’t have to raise taxes in order to bail out a failed pension system in the future.”
Other issues that the Florida Legislature will consider this year include requiring all Internet sellers to collect state and local sales taxes on purchases, requests by supporters for dedicated funding of environmental land purchases, reducing the size and liabilities of Citizen’s Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, and requests for increased funding of Florida’s ports and the state’s space agency.