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State to stash $1-billion windfall

Gov. Bush wants to save the money to avoid tax increases next year. Some legislators argue that it's needed now.

Published May 31, 2003

TALLAHASSEE - As schools, colleges and cultural groups across the state grapple with budget cuts, Washington is sending a $1-billion bailout to Florida.

But Gov. Jeb Bush doesn't plan to spend the money.

Instead, the governor wants to put the federal money in the bank and use it to avoid tax increases and further state budget cuts in 2004, when his brother, President Bush, will be seeking re-election.

"We are going to hold it in reserve," Gov. Bush said in an e-mail Friday to the St. Petersburg Times.

Some of the governor's fellow Republicans in the Legislature want to spend the money to ease the pain of the budget cuts they just approved.

"This is next year's budget money, so he doesn't have to raise taxes," said state Senate Appropriations Committee Chairman Ken Pruitt, R-Port St. Lucie.

The windfall, courtesy of President Bush and Congress, is meant to help states through a cash crunch. It could be a fiscal Band-Aid in Florida, where Gov. Bush himself warned months ago that he might have to raise taxes next year.

The money is Florida's share of $20-billion in federal relief to states, included in a tax cut bill the president signed into law Wednesday.

Nearly half the money is earmarked to reduce states' share of Medicaid, the federal-state program that provides health insurance to the poor and disabled. The rest was intended to be used for essential government services.

A battle is brewing between the governor and legislators over how the money should be spent. Bush wants to hold onto the money. Some fellow Republicans in the Legislature say it should be spent to help school districts avoid deep cuts or to resuscitate a popular antismoking program that was snuffed out of next year's budget.

"The federal government is coming to our rescue, and I am going to strongly encourage the governor that when these school districts have a shortfall, he now has a source to help them with," Pruitt said.

Gov. Bush said Friday he has no plans to spend the money, even though many school districts are planning to cut programs, and waiting lists for social services could grow in the months ahead.

The governor has criticized the Legislature's decision to cut the antismoking program, but said: "If they wanted to spend money on the tobacco program, they should have put it in the budget."

Pruitt said Florida's cash reserves are already very strong. Senate Democratic leader Ron Klein, D-Delray Beach, said the thrust of the tax cut bill is to stimulate the economy. "An economic stimulus is only effective if you spend the money," Klein said. "Why would we take hundreds of millions of dollars and bank it?"

Sen. Tom Lee, R-Brandon, said the money should be spent on one-time projects such as road construction, which he said is a proven job generator.

Lee and the other senators said the larger concern is that a $1-billion windfall from Washington allows the state to delay for one more year discussion of whether the state tax structure is sufficient to meet the needs of the nation's fourth-largest state.

The relief package for state governments was added to the tax cut bill by Congress, reportedly as part of a deal to secure the support of Ben Nelson, a Nebraska Democrat who was wavering in his support for other bill provisions. Florida's share is $948-million over the next two years, and the first installment of the money, about $272-million, is expected to arrive shortly after Oct. 1.

In January, Gov. Bush said that while he has cut taxes in each of his first four years in office, totaling $6-billion, "all bets are off" next year due to a skyrocketing series of expenses for Medicaid, smaller class sizes, a high-speed rail system, prekindergarten education and the long-delayed state financing of trial courts.

The governor isn't warning of tax increases any more.

"We're going to get about $950-million from the feds that will be stored away to deal with next year's budget, and the year after that," Bush told reporters on Thursday. "So we have resources, and if the economy's strong, then we'll make the determination of what to do."

Reminded of his past warnings of a tax increase, Bush said the challenge remains controlling the multiyear costs of Medicaid and the ballot initiatives.

"We can't continue forever and ever cutting programs that are important to Floridians. That's what I've said," the governor said. "My hope is that we'll find a way to curb these structural increases."

[Last modified May 31, 2003, 01:45:14]

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