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Florida state budget (2011-2012)

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Surplus

Florida collected $23.62 billion in general revenue during FY2012, which was $1.07 billion, or 4.7 percent, more than in the previous budget year.[1]

Florida's taxes and other general state revenues came in $407.1 million above estimates.[1]

Reasons for the surplus include:

  • Sales tax collections came in $152.3 million over estimate;
  • $70 million in corporate taxes collected by the state in June 2012 that were not due until FY2013, which began July 1, 2012; and
  • $300 million share of a $25 billion national settlement with major mortgage companies over allegations that they used deceptive foreclosure practices.[1]

Budget as passed

On May 26, 2011, Gov. Rick Scott signed a new $69 billion Florida budget but vetoed a record $615 million after lawmakers previously chopped nearly $4 billion. The plan eliminated about 4,500 state positions, most of them filled. School districts expected to lay off thousands more due to spending cuts.[2] The budget bill, Senate Bill 2000, can be found here. The budget was $4.6 billion smaller than 2006, and spending was down two percent from FY2011.[3]

Among the cuts Scott made were:[4]

  • Nearly $4.8 million to public television and radio Stations
  • Nearly $14 million from the various University of South Florida campuses
  • A request by the Tampa Bay Area Regional Transportation Authority to roll over its unspent balance
  • $305 million in a state trust fund for environmental land acquisition
  • Three line items for Daytona State College: $7.8 million for a remodel of and addition to the News-Journal Center, $2.4 million for remodeling the college's existing theater center and $3.012 million for renovation of a classroom building and air conditioning system improvements that college officials said would save $200,000 a year in energy costs[5]
  • $10 million appropriation for St. Johns River restoration[6]
  • $12 million for a national veteran's homeless support group
  • $6 million in economic aid to the Florida Panhandle
  • $165 million for construction, remodeling and renovation projects earmarked for Florida's universities, state colleges and K-12 public schools.[7]
  • $278.8 million from the Division of Emergency Management, approximately 40 percent of the agency's budget[8]
  • A full list of vetoed items can be found here

Education spending

For four years Florida devoted between 24.8 and 25.6 percent of its budget K-12 education spending.[9]

Fiscal Year Total Spending[10] Education Spending[11] Percent Education Spending
2009 $159.5 billion $40.0 billion 25.0%
2010 $163.8 billion $40.7 billion 24.8%
2011 $160.7 billion $40.5 billion 25.2%
2012 $159.7 billion $40.9 billion 25.6%

Pensions

Under the state budget, the state took three percent of salaries of teachers, police and state employees and put the money into the Florida Retirement System, replacing more than $1 billion of the state’s obligation to the pension fund. Unions including the Florida Education Association, Police Benevolent Association and the SEIU Florida Public Service Union filed a lawsuit on June 20, 2011, in Leon County, claiming that state law expressly provides that employees do not have to contribute part of their salaries to the state retirement system unless they agree to the change in their negotiated contracts.[12]

On March 6, 2012, Leon County Court Judge Jackie Fulford ruled that the decision the previous year to cut public employee salaries was an unconstitutional breach of the state's contract and ordered the money returned with interest.[13] The state appealed, which put a hold on the court's order to repay the money, and Representative Will Weatherford said he thought that the appeal would be successful and the decision would not impact the state budget.[14]

Changes in Florida's pension laws gave government agencies across the state a one-time windfall. Some agencies, such as Brevard Public Schools, would shore up an overall budget that lost $40 million in lawmakers' efforts to bring in a balanced state budget. Others, such as the Brevard County Sheriffs Office, used it to give employees raises and cost-of-living adjustments.[15]

Medicaid and Healthy Start

There were approximately 3 million Medicaid recipients in Florida.[16] On June 2, 2011, Gov. Scott signed two bills, HB 7107 and HB 7109, that privatized portions of the state's Medicaid program, which lawmakers said was overwhelming the state budget and needed to be privatized to rein in costs and improve patient care. It will cover the entire population in October 2014. The bills also required providers to generate a five percent savings the first year. The plan divided the bill into 11 regions where managed care plans and hospital networks bid on contracts to serve certain regions. The federal government had to approve the plan.[17] The governor said that the plan could save approximately $4 billion over the next two years.[16]

Medicaid had grown to 30.7 percent of the budget in the current spending plan from 22.2 percent of the budget in 2008. The federal government matched every state dollar spent on Medicaid with several federal dollars, which varied by program. That federal money was restricted to health care and could not be spent elsewhere. Much of the Medicaid growth was due to the federal stimulus and Florida’s 2009 $1-per-pack cigarette tax increase. Florida is also limited by federal law from cutting Medicaid eligibility or services.[18]

Two-thirds of the $24 billion that go to Florida's state budget was spent on Medicaid.[3]

The state's 32 Healthy Start coalitions saw their collective budgets reduced by $5.4 million for the fiscal year that began July 1, about a 23 percent reduction from the previous year's total of $23.6 million. Statewide, more than 14,000 women and children ware expected to lose free access to a litany of Healthy Start services, such as prenatal care, mental health and substance abuse counseling and parenting education.[19]

Jails

The Polk County Sheriff plans to sell boxers and briefs to inmates of the Polk County jail for a small fee. “We’re not going to let them pick the colors. We’ll give them any color they want as long as it’s white,” he joked. Judd said cutting the underwear will save around $45,000 a year, enough to save a job at the jail.[20]

The budget provided that the state will hire private vendors to run the prisons by Jan. 1, 2012. On July 18, 2011, the Florida Police Benevolent Association filed suit against Corrections Secretary Edwin Buss to block a plan to privatize 30 prisons in Miami-Dade, Broward and 16 other counties. Those prisons housed about 20 percent of Florida's inmate population, which was approximately 102,000.[21] In September 2011, Circuit Judge Jackie Fulford ruled that the plan to privatize nearly 30 prison facilities in South Florida violated the Florida Constitution because legislators included the provision in the state budget instead of passing it as a stand-alone law. Attorney General Pam Bondi said in October 2011 that the state would appeal the decision.[22]

The privatization proposal was $25 million over-budget because the Department of Corrections would have to pay comp time, vacation and sick leave to some 4,000 workers in those facilities that would lose their jobs, according to internal email between Department of Corrections officials that suggests lawmakers were warned the privatization push would come at a cost.[23]

Department of Environmental Protection

Gov. Rick Scott applauded the news that the state Department of Environmental Protection would look to cut its budget by $700 million, mostly through arrangements with the five water management districts across the state.[24]

Scott praised the Water districts for submitting tentative budgets that slash spending by more than $700 million, but stated the cuts in most cases were not enough. Scott called for additional cuts of $2.4 million including deferred compensation payments. He also asked for reductions in salaries and benefits, including limiting executive director salaries to $165,000, general counsel salaries to $160,000 and five percent reductions in the salary of any district manager making more than $100,000.[25]

Federal Funds

Under Gov. Scott, the state rejected more than $105 million in federal funds for programs linked to federal health care initiatives. It returned more than $4 million dollars to the federal government as well.[26]

Federal spending dropped 10 percent in the FY2012 state budget from the FY2011 budget, but the federal government remained the single largest source of money despite efforts from Gov. Rick Scott to reduce the state's reliance on Congress. In the FY2012 budget, $24 billion came from the federal government, and two-thirds of that went toward Medicaid.[3]

On Sept. 7, 2011, the Legislative Budget Commission approved a $31.5 million federal grant over five years for a home visitation program for at-risk families that would help curb child abuse and work with pregnant women.[26]

Mosquito Abatement

The state slashed its contribution to local mosquito control by half. With a line-item veto, Gov. Rick Scott closed a university mosquito lab that mosquito abatement officers relied on for pesticide research. Effective management of mosquitoes has been closely linked to the state's prosperity.[27]

Government layoffs

In the wake of large-scale budget cuts, the South Florida Water Management District laid off 134 employees in the past week, according to the Palm Beach Post. The 134 workers laid off from the South Florida Water Management District saved the district $9 million in salaries but cost more than 1,785 years of experience and institutional knowledge.[28]

Credit Outlook

Florida's credit outlook was revised to stable from negative because its new budget began to fix a longstanding gap between what it spends and what it collects, according to a new Standard & Poor's report. Florida continued to hold a AAA rating. S&P saluted Florida for working to rebuild its financial reserves, cushions which were depleted during the recession.[29] Fitch's said Florida's revenue sources were vulnerable to declines in the rates of population growth, consumption, and activity in the housing market, which continued its severe correction following a historic run-up. It added the state's debt burden was moderate and pensions were well funded. They also said Florida's long-term economic prospects were solid, although current economic performance remained weak.[30]

Standard & Poor's listed the state's rating at AAA in July 2011 based on "significant cost-cutting measures." After closing a budget hole, Florida was able to lower its borrowing costs, which may, in turn, improve the climate for businesses in the Sunshine State. Some credit Gov. Rick Scott and the state Legislature for the state's budget praise.[31]

Proposed Budgets

Governor's Proposed Budget

Gov. Scott presented his first budget proposal on Feb. 7, 2011 and the state's shortfall was estimated at $3.6 billion.[32] In his $65.9 billion budget the governor proposed reducing K-12 per-pupil by 10% and also cutting $3 billion from Medicaid over two years.[33] Overall, Scott proposed cutting state spending by $5 billion.[34] Because 80 percent of Florida's budget goes toward personnel, Gov. Scott is determined to tackle those expenses though downsizing and employee contributions.[35]

Lawmakers from both parties criticized the proposed budget for its lack of detail regarding the proposed cuts.[33]

Scott's budget included $2.4 billion in proposed tax cuts.[33] He said that he will cut the state corporate income tax by 45% and plans to reduce property taxes that are now directed to school spending by another $1.4 billion.[36]

He's also said that state employees should contribute to the state pension system for the first time.[37]

Other highlights of Scott's proposed budget include:

  • Cut number of judicial assistants in Circuit Courts by half
  • A $703 million cut in school funding
  • Eliminate $82 million at the Department of Corrections, which translates into 1,690 positions
  • In addition to the positions in the Department of Corrections, Scott's budget eliminates an additional 7,000 state positions.

Medicaid Reform

Gov. Scott said it is necessary for Florida to reform Medicaid. There are approximately 3 million Medicaid recipients in Florida. He is seeking a federal waiver to transfer Florida's Medicaid recipients into privately run managed-care programs, which he believes will save approximately $4 billion over the next two years.[16]

Florida's Medicaid program, which provides health care to low-income individuals and families, cost $20.2 billion for fiscal year 2010-11. Costs are shared equally between state and federal government. However, Medicaid costs in Florida are expected to climb to $25.08 billion by 2013-14.[38] It is unlikely the federal government will approve the plan until June, which is one month after the Florida budget is expected to pass.[16]

Some key provisions of the governor's Medicaid reform plan include:[39]

  • Create new patient co-pays for Medicaid recipients. Patients would be responsible for $100 co-pays for non-emergency care in hospital emergency departments (compared with $15 now)
  • It would create a $3 co-payment for visits to specialty physicians
  • Smokers and drug and alcohol dependent beneficiaries would have to consent to medically directed rehabilitation programs
  • The morbidly obese would be required to undergo a medically-directed weight-loss program
  • The reform plan would establish 19 Medicaid regions, where the state would contract up to 10 different insurance providers. Recipients could then choose a provider in their region
  • The reform would restrict eligibility to U.S. residents and non-residents in the country legally. Exceptions for emergency medical care and care of pregnant women would be made

Scott's plan is an expansion of a pilot program created by former Gov. Jeb Bush in 2006. That program affected five counties -- Broward, Duval, Baker, Clay and Nassau. Critics worry for-profit providers are scrimping on patient care and denying medical services to increase profits. Business Week reported that five years into the pilot program there's little data showing whether savings stem from providers offering less care or because they're delivering it more efficiently.[40]

Budget Criticisms

With Scott's new budget, more than 2,000 state employees will be forced into the unemployment line as the governor's plan eliminates 4,500 jobs, about half of which are filled. There will be significant layoffs for workers in state mental health hospitals, juvenile justice facilities and state prisons. In some cases those cuts could negatively impact rural communities where the state is a major employer. With an 8 percent cut in education funding, the new budget will result in the additional loss of thousands of jobs in schools around the state.[41]

Scott's critics say the plan is ill suited for a time when there are nearly 1 million Floridians without employment. Scott said his plan eliminates unnecessary government and will help create more private sector jobs.[42]

Union Protests

The governor's proposed budget slashes $3.3 billion from education and $340 million from state colleges and universities. Scott's proposals do not go as far as those of Gov. Scott Walker in Wisconsin who is seeking to end collective bargaining on benefits for public unions. Unlike the Midwestern state, organized labor has a small presence in the private sector of Florida's economy.

Even prior to the release of Gov. Scott's budget public employee unions were scheduling protests to his proposed cuts, including public employees to contribute 5 percent of their paychecks and enrolling all new public employees n 401(k)-like plans.[43] A union leader told PNJ.com that requiring a 5 percent contribution to the pension plan is nothing more than a 5 percent pay cut.[44]

The Florida Senate passed Bill 736, which would eliminate tenure for teachers hired after 2014. It would tie 50 percent of a teacher's pay to the performance of that teacher's students on standardized tests. Gov. Rick Scott has promised to sign the bill. This is legislation that many Miami-area teachers are already threatening to protest.[45]

Protests by various teacher organizations are planned for the March 8, the day the 2011 legislative session opens.

The Florida Community Action Network is planning a series of "Awake the State" rallies across the state on March 8. The rallies will protest budget cuts in all areas, not just education.[46]

Collective bargaining rights for public employees are protected in Florida's constitution, although legislators have proposed measures that would restrict union activities.[47]

Counter Protests

Florida Tea Party organizations are planning to rally at the capital on March 8, the day the new legislative session opens, in support of Gov. Scott's budget proposals. The number of Tea Party groups planning rallies in support of Gov. Scott has grown from 8 to 17.

Consumer Confidence

University of Florida researchers say Floridians outlook has been shaken due to the state budget. In a June 1, 2011 report UF's Bureau of Economic and Business Research's consumer confidence rating dipped to 68, the worst since September 2010. Perceptions on personal finances compared to a year ago dropped 4 points to an anemic 52. Because political organizations seized on the cuts in the new budget signed by Gov. Scott, the downbeat mantra has resonated in the media echo chamber and stuck in the public's mind.[48]

When it comes to deciding whether now is a good time to make large purchases, such as appliances or a car, Florida’s index component dropped a point to 74, while perceptions on Floridian’s personal finances compared to a year ago also dropped four points to 52. Although April brought some positive signs of recovery, the report said the economic environment is still mixed. Unemployment dropped to 10.8 percent — the lowest in Florida since 2009 — but the rate is still one of the highest in the country. Median housing prices rose to $132,700, but the report said prices could decline as a backlog of foreclosures moves through the courts. Gas prices have declined the past two weeks, but should rise again with the summer travel season approaching. Nationally, the Conference Board’s Consumer Confidence Index fell unexpectedly from 66 to 61 in May. Analysts attributed the drop to high gas prices and general unease with both the job market and housing prices.[49]

UF's monthly consumer-confidence survey, which is timed to coincide with the Conference Board index, conducts 500 telephone interviews of Florida households via random digit dialing. Reported results are proportionate by county population, though not by party affiliation.[50]

Legislative Budgets

On May 1, 2011, legislators agreed to save more than $200 million with budget caps for the state's water management districts and also a prison-privatization plan.[51] Overall, the legislative budget cut nearly $4 billion from schools, employee benefits, health care and environmental programs but also included $70 million in tax incentives for the new "Department of Economic Opportunity" and $25 million for a three-day sales-tax holiday for back-to-school supplies in August.[52]

Neither the House nor the Senate budgets leave much room for tax cuts or fee reductions. In contrast, Gov. Scott had asked for a $2.4 billion in revenue reductions, including a reduction in property taxes.[53]

After two weeks of no movement, the House and Senate broke their deadlock with a deal that leaders said would balance the budget without raising taxes or fees. It includes $22.7 billion general revenue and also accounts for spending in areas such as public schools and health and human services while cutting approximately $4 billion in spending.[54]

Unlike the House, the Senate seeks to take over operations of expressway authorities. Also, the Senate pulls state water management districts into its budget. Those contribute to the two Senate budget of $69.8 billion, which is $3.2 billion larger than the House plan. The Senate cuts slightly fewer salaried positions, about 5,000. Another difference is that the House raids single-purpose trust fund accounts by $704 million, including $300 million from the category used for building and repairing roads and bridges.[53] The differences in two chambers’ budget plans must be reconciled by May 6 when the session ends. They were negotiating until talks broke down over the costs of higher-education cuts and new requirements over public-employee pensions.[55]

Pensions

The House budget plan includes a three percent flat contribution rate from state employees to their pensions. The Senate budget takes a tiered approach to pension contributions, with a two percent for salaries under $25,000, a four percent for salaries between $25,000 to $50,000, and a six percent rate for those who earn more than $50,000. Both plans fall short of the governor's proposed five percent flat contribution rate for all 655,000 members of the Florida Retirement System.[56]

References

  1. 1.0 1.1 1.2 The Miami Herald "Fla. revenue $407.1M over estimate for budget year" July 27, 2012
  2. Miami Herald, Scott Signs New Florida Budget, May 26, 2011
  3. 3.0 3.1 3.2 The St. Petersburg Times "Debt debate that divided Congress and hurt markets could affect Florida's budget" Aug. 12, 2011
  4. WMNF, RIck Scott Signs Florida Budget, Slashes $600 Million in Line Item Vetoes, May 26, 2011
  5. Daytona News Journal, Daytona State takes big hit in $69.1 billion Florida budget, May 26, 2011
  6. Daytona News Journal, Daytona State takes big hit in $69.1 billion Florida budget, May 26, 2011
  7. Reuters, Florida governor vetoes $615 million of spending, May 27, 2011
  8. Bloomberg "Irene Aims at U.S. States Suffering Budget Cuts for Emergencies" Aug. 24, 2011
  9. State Budget Solutions "Throwing Money At Education Isn't Working" Sept. 12, 2012
  10. USGovernmentSpending.com "Florida Government Spending Chart - Total Spending" Aug. 4, 2012
  11. http://www.usgovernmentspending.com/spending_chart_1997_2017ALb_13s1li111mcn_20t USGovernmentSpending.com "Florida Government Spending Chart - Education Spending"Aug. 4, 2012
  12. The Miami Herald "Teachers sue state over ‘unconstitutional’ pay cut to balance the budget" June 20, 2011
  13. The Miami Herald "Judge rules against the state in pension case, creating potential budget gap" March 6, 2012
  14. Bloomberg March , 2012
  15. Florida Today, Brevard governments use pension windfall to balance budgets, give pay raises, June 13, 22011
  16. 16.0 16.1 16.2 16.3 Business Week, Fla. Lawmakers Could Expand Medicaid Privatization, Feb. 1, 2011
  17. The Miami Herald "Florida governor signs historic Medicaid bill" June 2, 2011
  18. NPR, Education’s Florida Budget Competition, Aug. 25, 2011
  19. News Chief, Budget cuts hit Healthy Start Coalitions hard, Aug. 22, 2011
  20. Fox News, Sheriff Cuts Free Underwear From Jail's Budget, July 14, 2011
  21. The Miami Herald "Scott plan to privatize prisons draws suit by police union" July 19, 2011
  22. Businessweek "Florida prison privatization decision appealed" Oct. 31, 2011
  23. Orlando Sentinel, DOC privatization plans hit a couple of snags, Aug. 17, 2011
  24. Sunshine State News, Rick Scott Cheers the News of DEP Saving Taxpayers $700 Million, Aug. 24, 2011
  25. Daytona Beach News Journal, Governor orders water districts to make more budget cuts, Aug. 25, 2011
  26. 26.0 26.1 Fosters Daily Democrat "Fla. passes up over $100 million in federal grants" Sept. 13, 2011
  27. Reuters, Florida budget cuts, mosquito burst create itchy issue, July 15, 2011
  28. Florida Independent, Major layoffs at South Florida Water Management District, Aug. 18, 2011
  29. Reuters, Florida outlook improves to stable with budget: S&P. July 12, 2011
  30. Businesswire, Fitch Affirms Florida's Appropriation Bonds 'AA+'; Outlook Negative, July 15, 2011
  31. News 4, Fla. Credit Rating Improves As US's drops, Aug. 16, 2011
  32. Cite error: Invalid <ref> tag; no text was provided for refs named streamlining
  33. 33.0 33.1 33.2 The Miami Herald "Lawmakers demand Florida budget details from Gov. Scott" Feb. 9, 2011
  34. ABCNews.com "Cash-Strapped States Facing Budget Crises, Governors Facing Tough Decisions" Feb. 13, 2011
  35. Sunshine State News, Tea Parties Counter Public Employees, Feb. 23, 2011
  36. The Miami Herald "Gov. Scott says budget will include $2 billion in tax cuts" Feb. 3, 2011
  37. Reuters "Florida governor wants cheaper state pensions" Feb. 1, 2011
  38. Politifact, Scott Goes to Washington Looking for Waiver, Feb. 7, 2011
  39. News-Press, Managed Care in Florida Medicaid Reform, Feb. 23, 2011
  40. Business Week, Fla. Lawmakers Could Expand Medicaid Privatization, Feb. 1, 2011
  41. Ocala Scott's budget brings job losses, June 4, 2011
  42. Ocala Scott's budget brings job losses, June 4, 2011
  43. Orlando Sentinel, Protests to Scott's Budget Scheduled by Public Employee Unions, Feb. 7, 2011
  44. PNJ.com Teachers Blast Budget Cuts, March 1, 2011
  45. Examiner Senate Bill 736 Approved, Feb. 23, 2011
  46. TBO, Local Teachers Plan Rallies to Have their Voices Heard, Feb. 24, 2011
  47. The Daytona Beach Times Union "Will Florida lawmakers target unions?" March 6, 2011
  48. Sunshine State News, State budget sinks consumer confidence, UF says, June 1, 2011
  49. Poder360, Budget Affects Consumer Confidence in Florida, June 1, 2011
  50. Sunshine State News, State budget sinks consumer confidence, UF says, June 1, 2011
  51. The Miami Herald "House and Senate closer to agreement on budget" May 1, 2011
  52. The St. Augustine Record "State budget to slash $4B" May 2, 2011
  53. 53.0 53.1 The Miami Herald "House committee approves deep budget cuts" March 31, 2011
  54. Businessweek "Fla. House, Senate leaders break budget deadlock" April 26, 2011
  55. The Miami Herald "Budget talks break down" April 13, 2011
  56. Sunshine News "Gov. Rick Scott Pushes His Pension Reform Plan Ahead of Budget Talks" April 13, 2011