State: Budget savior seen in trust funds

TALLAHASSEE -- When Chris Hockett of St. Petersburg pumped 11 gallons of unleaded gas into his Saturn SUV on Saturday, he also pumped a couple more dollars into the state Treasury.

But despite growing pressure on Gov. Jeb Bush and the Legislature to find billions for smaller classes and other needs, Hockett's gas tax dollars can't pay for another teacher. Gas taxes support roads and bridges. The money sits in a special account known as a trust fund.

It's the law, and Hockett likes it that way.

"I kind of like knowing that they can't control more of it," the 43-year-old motorist said. "They should put the money where they said they were going to."

The budget is honeycombed with trust funds, more than 500 fiscal cubbyholes that hold nearly $30-billion. They include money from an array of taxes, fees, federal grants and proceeds from the lottery.

Taxes on electric bills pay for college buildings. Hotel taxes promote tourism. Taxes on property deeds pay for everything from beach renourishment to affordable housing.

About 60 percent of the budget is now squirreled away in untouchable trust funds, some with hefty balances. At the same time, voters are imposing costly new demands on Bush and lawmakers to find billions more for smaller classes, universal prekindergarten and a bullet train in an era of economic sluggishness.

To Bush, it doesn't make sense.

"Gol-ly," Bush says. "We've got a trust fund for everything under the sun, and it does restrict our ability to be flexible and focus on the priorities."

Bush and House Speaker Johnnie Byrd, R-Plant City, adamantly oppose new taxes, and even greater budget pressures are coming next year and in 2005. A desperate search for money is under way, and some leaders think they've found their pot of gold in trust funds.

Bush first raised the subject at a December Cabinet meeting during a discussion of the state's mounting debt. He had just met with Wall Street bonding firms and reported that what those financiers wanted most was "to eliminate trust funds and put more money back into general revenue."

General revenue refers to the rest of the budget, about 40 percent, supported mostly by sales taxes. That money is subject to the discretion of Bush and lawmakers, but most of it supports schools and human services.

When Bush sends his next budget to the Legislature on Jan. 21, he likely will recommend eliminating some trust funds, freeing up hundreds of millions of dollars. But Bush risks alienating powerful interests, and even fellow Republicans such as Agriculture Commissioner Charlie Bronson, who relies heavily on trust funds to run his operations.

Others warn that Bush and Byrd risk breaking faith with Floridians again, as the state did when it diverted lottery money from schools to the general fund in the 1990s. Voters still complain about that.

Many taxes and fees that Bush and Byrd covet were passed with a commitment that they would not be used for anything else. Getting those money-raising bills through the Legislature would have been more difficult without that promise.

"If you break faith with the people in the use of those funds, I don't know how you're going to get that faith back," said Gene Adams, a lobbyist for the Florida Association of Realtors, whose members' license fees pay for state oversight of the industry. "We're very concerned."

So is Senate President Jim King, R-Jacksonville. Unlike Bush and House leaders, King is willing to consider new taxes in difficult financial times. But he opposes any wholesale elimination of trust funds.

After all, he says, there's a reason they are called trust funds. "When they were created, the premise was there would be money collected and set aside for that purpose," he said.

Behind every trust fund is an influential interest group -- a university, an environmental group, a trade association or a group of elected officials.

Take beach renourishment. Three years ago, Bush signed into law a bill that dedicates part of documentary stamp taxes, paid by home buyers at closing, to replenish beaches with sand.

He signed it on the shores of Treasure Island with the sand and surf as a backdrop and dozens of happy beach politicians alongside. Those same officials hope to hang on to their guaranteed money.

"This was something that we used to fight for every year and wait every year until the budget passed to see if we got funded," said J.J. Beyrouti, mayor of Redington Shores and leader of a group of Pinellas beach officials. "Since they passed this, we know we have the funding source."

Now, a state that depends heavily on a 6 percent sales tax and struggles to shake off the effects of a recession expects only modest growth in sales tax revenue in 2004. More than 57,000 new students are expected to enter the public schools, and Medicaid is swallowing an ever larger portion of the state budget.

Threatening to raid trust funds illustrates the magnitude of the challenge the governor and state legislators face as they cobble together a budget.

The Legislature didn't touch the funds before because the strain on the budget wasn't as great, said Dominic Calabro, president of Florida TaxWatch, a group that closely monitors state spending practices.

Bronson finds himself forced to fight for more than $8-million in federal grants, including money for domestic security. The money would be destined for trust funds, out of the reach of Florida lawmakers.

A legislative budget commission meets Wednesday to vote on Bronson's use of the money. Bronson is frustrated that he must lobby House members, who are reluctant to add to the trust funds, to vote in favor of the grants even though no state money is involved.

"If we turn this money back to the federal government, it will go to another state that may not have as good a program as we do," Bronson says. The commissioner said that Florida already sends significantly more tax money to Washington than it gets in return.

Bronson, too, worries that tampering with trust funds risks destroying the voters' fragile faith in state government. "I think there may be a mistrust of the system if that happens, and I am worried about that," Bronson said. "I'm worried that there could be lawsuits."

Trust-fund fever is rampant in the Capitol. House members, including a crop of 30 freshmen, attended their first budget meetings last week and discovered for the first time that they exert control over only $20-billion of a $50-billion state budget, or 40 cents of every dollar the state spends.

Byrd's marching orders: Change that.

"There are no more free passes. Everything has to be questioned," said Rep. Bruce Kyle, R-Fort Myers, as he chaired his first meeting of a new House Appropriations Committee. "Everything has to have a justification."

-- Times staff writers Amy Wimmer and Lucy Morgan contributed to this report.

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