2013 LEGISLATURE

State budget surplus will spur intense debate on what to fund

 

For the first time in three years, a slow but steady economic recovery means Gov. Rick Scott will have more tax money to spend — not less.

WEB VOTE How do you think the state budget surplus should be invested?

Herald/Times Tallahassee Bureau

Gov. Rick Scott this week will send the Legislature a proposed budget that’s a blueprint for spending and a road map to his re-election campaign — complete with potholes.

For the first time in three years, a slow but steady economic recovery means Scott will have more tax money to spend — not less. But Scott, who ran as a small-government conservative, has rankled state lawmakers by calling for a $2,500 pay raise for every full-time teacher at a cost of $480 million, in effect sweeping much of a modest projected surplus, and declaring teacher pay a higher priority than other needs.

A year after championing a 3 percent raid on teachers’ salaries, Scott has decided they are underpaid, and they now make up a prized constituency. For three days, Scott toured schools in Tampa, St. Petersburg, Gainesville and Orlando to amplify his call for higher teacher pay.

“Our revenues are up. We have a projected surplus now,” Scott said Friday in St. Petersburg. “If we’re going to have a great education system, we’ve got to take care of our teachers. They’re doing the right things.”

But his fellow Republicans in the Capitol aren’t yet convinced that Scott is doing the right thing.

His call for across-the-board teacher pay hikes unnerved lawmakers who say he didn’t specify where the money would come from and that it contradicts a state policy of linking pay to classroom performance.

“I think the governor would have more credibility with teachers if he would be able to identify where the money’s coming from,” said Senate President Don Gaetz, R-Niceville. “I was surprised at the notion of an across-the-board increase that would draw no distinctions.”

Gaetz said Scott’s respect for teachers is real, but it’s also obviously about re-election politics. “There’s a blurry line between politics and policy,” he said.

Scott has struggled to improve his standing with Florida voters. Recent polls show that a majority of Republicans hope he faces a challenge from within his own party in 2014.

“He’s spending all this money because his poll numbers are so low,” said Rep. Mike Fasano, R-New Port Richey. “People are a lot smarter than politicians give them credit for, and this is a perfect example.”

The $70 billion-plus budget Scott will propose next week is a midterm course correction for a governor who narrowly won in 2010 and quickly alienated educators by cutting public schools by $1.3 billion. His last budget restored $1 billion of the previous year’s cut, but the political damage lingered.

As Scott sees it, he had to make tough choices in a recession. Now that unemployment has rebounded from 11.1 percent to 8 percent, he says, it’s time to invest more in schools.

Scott also wants to give a tax break to 17,500 manufacturing companies in Florida by exempting new equipment purchases from the state sales tax. Current law requires firms to prove that new equipment boosts production by at least 5 percent.

He wants to hold the line on tuition at state colleges and universities. With state debt steadily shrinking, Scott will propose no major borrowing, but he wants $14 million to give $250 debit cards to teachers to defray out-of-pocket classroom costs.

He will propose spending $15 million to reduce the statewide waiting list for disabled adults who need home and community-based care.

After five straight years of budget cuts, Scott’s spending push is a preview of the upcoming scramble for surplus money, said Florida TaxWatch researcher Kurt Wenner.

“The longer you go where you don’t give out money, the more pent-up demand you’ll create,” Wenner said. “When you finally get money, that demand will be intense.”

The parade of requests for more money has just begun:

•  Reducing an unfunded liability in the state pension fund carries an estimated cost of $300 to $500 million.

•  Steady growth in Medicaid case loads is projected to cost the state $300 million next year.

•  Nearly 30,000 new students are expected to enroll in public schools next fall at a cost of $184 million, and school districts want up to $100 million more to make campuses safer in the aftermath of the mass killings in Newtown, Conn.

•  Florida universities have asked for $118 million in return for forgoing any new tuition hikes, and they would like the state to restore $300 million cut from their budgets this year.

State money for Medicaid, schools and universities comes from the same pot of general tax money that would pay for a teacher pay increase.

The current state budget is $69.9 billion, but Scott and the Legislature can only exert influence over about one-third of that amount — the tax revenue Florida residents send to Tallahassee. The rest is federal money or state trust funds that is set aside for a specific purpose, such as building roads or reimbursing hospitals.

Florida has about $2.1 billion in reserves set aside for emergencies. Keeping a reserve equal to 10 percent of the state’s tax base, as Wall Street bonding agencies prefer, would cost $2.6 billion next year.

“There are a lot of demands,” said Senate Appropriations Committee Chairman Joe Negron, R-Stuart.

Times/Herald staff writers Lisa Gartner and Toluse Olorunnipa contributed to this report.

Contact Steve Bousquet at bousquet@tampabay.com or (850) 224-7263.

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