Rainy day fund shrinks
By ALISA ULFERTS, Times Staff Writer
TALLAHASSEE -- Last month, Gov. Jeb Bush worried publicly about the tiny rainy day fund lawmakers had included in the state budget. "We are living in uncertain times," Bush told reporters.
This week, he cut it in half.
Through a combination of vetoes and money shifts, Bush reduced the emergency fund from $98-million to $50-million. That's four to six times smaller than in previous years.
"It's dangerously low and probably not enough for even an economic hiccup," said Dominic Calabro, head of the nonpartisan government watchdog group Florida TaxWatch.
Senate Majority Leader Jim King, R-Jacksonville, said the fund doesn't leave much "for the rainy day."
With hurricane season under way and the threat of another terrorist attack still looming, Bush had expressed similar concerns before signing the $50-billion budget. Now, however, Bush says he's not concerned.
"We have other reserves that will allow us to deal with circumstances that are beyond our control," Bush said Wednesday, shortly before signing the budget.
By declaring a state of emergency, Bush can suspend the state's purchasing rules and tap other reserve accounts that normally would be off limits.
But Calabro said that would just delay a financial problem that the Legislature would have to fix after the emergency was over. One reserve account Bush mentioned, the Budget Stabilization Fund, amounts to a loan that lawmakers would have to pay back over several years.
And if the economy got drastically worse or a disaster was particularly expensive, lawmakers might have to cut the budget to make up the difference, as they did last year when state revenues dried up after the Sept. 11 terrorist attacks.
Having more money in the rainy day fund would make such drastic action less likely, Calabro said.
"This brings us right to the very edge of our cash flow," Calabro said. "We're playing with a much smaller margin of error."
In previous years, the rainy day fund hovered between $200-million and $300-million and gave lawmakers some insurance in case of an emergency or in case the state didn't collect as much in taxes as it had predicted it would.
Yet lawmakers left just $98-million in the fund when they handed their budget over to Bush last month. Bush said he thought they were relying on him to veto some of their pet projects to increase the fund.
It didn't work out that way.
Bush vetoed just $107-million in pet projects, of which only $50-million could legally be added to the rainy day fund. That brought it up to almost $150-million.
But then Bush vetoed lawmakers' plan to convert $100-million from an environmental reserve account to all-purpose cash -- without cutting the programs they had planned to spend it on. That opened a $100-million hole in the budget that the rainy day fund filled, leaving a balance of just $50-million.
Calabro said he had hoped that Bush would veto about $300-million in projects, as he has in the past. That would have gone much further in replenishing the rainy day fund.
But King, though worried about the low level in the rainy day fund, said lawmakers followed Bush's guidelines for acceptable pet projects and thus put fewer actual "turkeys" in the budget, leaving less for Bush to veto.
"If you met the test, . . . then you had a chance," King said.
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From the Times state desk
From the state wire