TALLAHASSEE -- Florida's legislative leaders announced Monday that they will convene an extraordinary lawmaking session Jan. 5 to close the state's ever-widening $2.3 billion budget hole.

Legislators will focus on cutting the budget and shifting money from savings accounts and other funds, House Speaker Ray Sansom, R-Destin, and Senate President Jeff Atwater, R-North Palm Beach said in a joint announcement. Tax and fee increases, and ratification of the gambling compact with the Seminole Tribe of Florida, appear to be off the table until the regular session in March.

''Based on a careful review of the status of the 2008-2009 state budget, and after consultation with Gov. Crist's office, we have concluded that it is in the best financial interest of the state'' to convene the special session, Sansom and Atwater said in the statement.

Legislators had little choice. The Florida Constitution forbids budget deficits. And after months of declining state revenues, the full Legislature must convene to make tough decisions about what programs to cut.

For months as the deficit mounted, Sansom said lawmakers could wait until the regular session in March to mend the gap. Atwater, however, warned last week that waiting could harm Florida's credit rating. And Crist, who had also wanted to postpone action, acknowledged last week that a January session might be necessary.

''The budget challenges before us are serious,'' Sansom and Atwater said in their statement. ``We are prepared to meet those challenges. We intend to provide essential services to the citizens in a fiscally prudent way.''

Florida's budget currently stands at $66.3 billion -- $7.4 billion less than just two years ago. Next year, the outlook is even more bleak.

Based on forecasts of tax collections, which have precipitously declined, state economists estimate next year's budget hole could be about $5.8 billion -- and that would be after this January's cuts.

The deep budget hole suggests lawmakers will have to make cuts that could mean the elimination of health programs such as Meds AD and the Medically Needy, which respectively serve poor senior citizens and the catastrophically sick.

SCHOOLS AFFECTED

Schools could also face a huge cut next year because property values are swiftly declining. If this year's property-tax rate were held the same, schools statewide would see their spending reduced by $780 million.

''Anyone who depends on the state should be deathly afraid,'' said lobbyist Ron Book, who represents myriad local governments, such as Miami-Dade County, and private clients.

Democrats have urged Republican leaders to consider increasing the cigarette taxes, raising fees for government services or closing tax loopholes to offset some of the worst cuts.

But Crist and the leaders of the GOP-controlled House and Senate have rejected that approach. Crist said he prefers to tap at least $300 million in trust fund accounts established for special projects and purposes.

He said he probably would recommend taking money from the Lawton Chiles Endowment Fund even though the former governor's family threatened to sue the state if legislators deplete the annuity. The fund, established for kids' and seniors' health care from proceeds from Florida's tobacco lawsuit, lost almost half its $2.1 billion value in recent months as the stock market tanked.

OTHER MEASURES

Crist's office has also discussed whether to recommend state-worker furloughs, eliminating or combining state agencies, and increasing fees for some government services.

Chief Financial Officer Alex Sink, the only Democrat in the Florida Cabinet, was the first to call for a special session a month ago. She praised the decision Monday, and urged lawmakers to first comb the budget to eliminate any ''non-mission-critical'' elements and review all sales tax exemptions. The last resort, she said, should be to consider revenue increases, such as an increase in the cigarette tax.

Sink also warned against depleting the Chiles endowment. If they use the money to plug the state's budget hole, that ''in effect kills the fund,'' she said.

As the state's treasurer, she said she expects to have to borrow ''a couple hundred million'' dollars more from trust fund accounts to balance the budget by January on top of the $750 million already borrowed.

`TOUGH DECISIONS'

''There are some really tough decisions that need to be made,'' Sink said. ``Surely, by the first of the year they have got to do something. The checkbook is not looking any prettier.''

Marc Caputo can be reached at mcaputo@MiamiHerald.com.

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