FLORIDA LEGISLATIVE UPDATE
On January 14th, 2009, the Florida Legislature closed the expected $2.8 billion gap in the current FY08 budget by cutting education and social services programs, increasing traffic fines, and borrowing heavily from state trust funds and reserves. The final budget vote in the House 74-43, with the Senate voting 27-13.
Schools and social services programs took the biggest hit, with cuts of about $1.2 billion. This includes a cut in education funding of $140 per student and other education cuts of around $466 million). The cut is being described as a two percent decrease, but because local funds provide so much support for actual education costs, this cut actually represents a four percent reduction in state funding for education.
Although lawmakers approved a $10 increase on all fines for traffic infractions and a $25 increase for speeding fines, most other revenue increases were not considered. For example, no action was taken on a long-proposed $1-a-pack tax on cigarettes that supporters believe could yield $700 million per year. A currently-derailed gambling compact with the Seminole Tribe of Florida that could yield over $100 million a year was also set aside. Nor was any action taken on the numerous sales tax exemptions, including infamous exemptions for ostrich feed, bottled water, and college football skyboxes.
Instead, the Legislature borrowed heavily from trust funds and reserves (SB 4A), including $700 million from the Lawton Chiles Endowment Fund, which the Legislature expects to be able to repay from a federal economic stimulus package. Another $400 million was borrowed from the Budget Stabilization Fund, which is a sort of state savings account used for short-term emergencies. This amount must be repaid starting in three years. An additional $190 million was reallocated from an affordable housing trust based on the argument that Florida already had a surplus of affordable housing available. This housing reallocation may bankrupt 36 current housing projects currently in progress, according to an industry lobbyist. For more information, see http://www.forbes.com/feeds/ap/2009/01/14/ap5921344.html
The primary education spending bill (SB 6A) and the general appropriations bill included other measures of note:
* Contracts (such as for district school superintendents) may no longer include buy-out clauses with values exceeding one year's salary.
* Districts no longer need to certify their class size compliance in order to establish pre-kindergarten programs, and the summer school pre-k class size was increased from 10 to 12.
* Districts need not immediately purchase newly-adopted instructional materials due to a one-year waiver of this requirement.
* The Commissioner of Education now has power to appoint a financial emergency board for any school district with reserves less than two percent of projected revenues.
* Districts were provided with increased flexibility in the use of special 1.75 mil discretionary levies, from the equivalent of $65 per student to $100 per students. Enterprise resource software may be included in such levies.
* Merit awards (MAP) for teachers and administrations will be paid only if specifically funded, and bonuses for National Board teachers were cut again.
A version of this bill that approved 14-7 by the Senate Ways and Means committee but which did not come to a floor vote was to provide the Commissioner of Education with broad authority to cut the salaries of school district employees in the event of a state financial emergency.
See the committee report at http://www.flsenate.gov/data/session/2009A/Senate/bills/analysis/pdf/2009s0006A.wpsc.pdf
Amid concern over heavy borrowing by the Florida legislature and a stalled housing market, Standard & Poor's reduced the outlook for Florida's $13.4 billion of state-insured debt from “stable” to "negative," which may signal a reduction in the state's bond rating and make it more costly for the state to borrow in the future. In a message to clients, S&P criticized the Legislature's use of one-time revenues to postpone solving the state's revenue shortfall.
Orlando Sentinel article at http://blogs.orlandosentinel.com/news_politics/2009/01/bloomberg-flori.html