Crist budget may lead to tax hike

Posted on = Fri, Feb. 01,=20 2008

BY GARY FINEOUT AND MARY ELLEN = KLAS

Fresh off a major tax-cut victory at the = polls,=20 Gov. Charlie Crist on Thursday proposed a $70 billion state = budget=20 that relies on schools to collect more property taxes, raids = dedicated trust funds and depends on more money from = gambling to=20 avoid deep cuts.

The governor's proposal attempts to minimize the pain of=20 balancing the state budget in the face of a $2 billion = budget=20 shortfall and a weak housing market. It drew immediate fire = from=20 skeptical GOP legislative leaders, who say they are more = inclined to=20 cut programs than find new ways to pay for spending.

''We are facing extraordinary economic times,'' Crist = said=20 Thursday. ``And in times such as these, it is important for = your=20 government to spend your money wisely and to live within our = means.''

Crist called his budget a ''bridge to the future'' that = calls for=20 spending more on schools, healthcare and alternative energy. = It also=20 calls for continuing annual sales-tax holidays for hurricane = supplies, clothes and back-to-school supplies.

But Crist's budget relies on $338 million in increased = local=20 property taxes to pay for schools, a move that could mean = higher tax=20 rates in some counties and potentially offset about 40 = percent of=20 the $876 million in savings voters were expecting in 2009 = because of=20 the increased homestead exemptions required after Tuesday's = passage=20 of Amendment 1.

The governor also proposes tapping $1.1 billion in = special=20 accounts, known as trust funds, that pay for healthcare, = affordable=20 housing and the administration of workers' compensation = insurance.

BIGGEST RAID

The biggest raid -- $400 million -- would come from the = Lawton=20 Chiles Endowment, the trust fund that pays for children's = healthcare=20 with settlement money received from tobacco companies.

But lawmakers, who have final say in approving the state = spending=20 plan for the fiscal year that begins July 1, appeared ready = Thursday=20 to reject trust-fund borrowing.

''The House believes that thoughtful spending reductions = would=20 best serve Florida long term -- not tax increases, = accounting=20 transfers, or a new reliance on one-time or stagnant revenue = sources,'' said Rep. Ray Sansom, the Destin Republican and = chief=20 budget writer in the House.

His position was echoed by Sen. Lisa Carlton, an Osprey=20 Republican and leader of the Senate budget panel, who said = her=20 chamber will take a ``long-term view, keeping a keen eye on = the=20 condition of our economy in Florida and nationally.''

Crist's budget also leans heavily on taking in more money = from an=20 increase in gambling. He proposes adding midday drawings of = popular=20 Lottery games such as Cash 3 and Play 4 to generate = additional=20 money, despite his campaign pledge not to expand gambling.

Crist underscored his priorities by asking state = lawmakers to=20 increase spending in a handful of policy areas:

=95 $1 billion more for = schools;

=95 $200 million to spur = development=20 of alternative energy sources;

=95 $60.6 million to add = 46,000 kids=20 to the Florida KidCare health insurance program;

=95 Nearly $64 million = for a pilot=20 program to help provide healthcare to uninsured residents in = 14=20 counties, including Broward, Miami-Dade and Monroe.

The governor also proposed spending nearly $100 million = for state=20 employee pay raises, although the raises would not be=20 across-the-board, but instead could be based on merit or = targeted at=20 specific jobs that suffer from employee turnover.

Crist proposed just $230 million in cuts, including = slashing=20 financial aid to students who attend private universities = such as=20 the University of Miami and lowering reimbursement rates to = HMOs=20 that treat poor Floridians.

The governor's trust-fund raid would also include using = $129=20 million from the workers' compensation trust fund, which = pays for=20 the administration and regulation of the state's workers=20 compensation system, and $95 million from the insurance = regulatory=20 trust fund, an account that comes from taxes charged on = insurance=20 premiums and pays for the office that regulates the = insurance=20 industry.

Chief Financial Officer Alex Sink criticized that idea, = saying it=20 was tantamount to a tax hike because it could trigger an = increase in=20 assessments charged to employers.

''To me that's robbing Peter to pay Paul,'' Sink said.

PROPERTY TAXES

The governor's budget also relies on a $337.8 million = increase in=20 local property tax revenue collections. School districts can = make up=20 that money if there is natural growth in property = assessments=20 because of rising property values. But if property values = and=20 revenues fall, districts might have to raise the tax rate to = make up=20 the difference.

The irony of raising taxes to pay for tax cuts wasn't = lost on=20 Broward school officials this week as they began trying to = figure=20 out how to overcome the $145 million loss to schools that = Amendment=20 1 will cost the district over the next five years.

''So it looks like we're raising taxes,'' board member = Bob Parks=20 said. ``Don't you love America?''

Miami Herald staff writer Nirvi Shah contributed to this=20 = report.