Budget would grow, and cut

Gov. Bush proposes the state's largest spending plan, which would cut taxes and health care.

Published January 19, 2005

TALLAHASSEE - Gov. Jeb Bush on Tuesday sent the Legislature a $61.6-billion budget proposal for next year that boosts school spending and cuts taxes while raising college tuition and cutting health care to the poor.

Bush's spending plan, the first in state history to exceed $60-billion, is $985-million or 1.6 percent over current spending, which grew in recent months, mostly to cope with post-hurricane problems.

With Florida's economy outpacing most states, and tax collections up because of busy retail sales after last year's four hurricanes, Florida expects a windfall of more than $4-billion next year. It is considered fiscally risky to spend windfall dollars on continuing programs, so Bush wants to use the money for one-time purchases, pay cash instead of borrowing and keep $3.8-billion in reserves.

He also wants to cut taxes by $285-million, on top of $10.7-billion in cuts the past five years.

"If anyone expects me to be defensive about this, or think this is not the right approach, they don't know me," Bush said.

Democrats assailed Bush's priorities, saying he is favoring the rich through tax cuts while squeezing middle-class Floridians with higher tuition, and hurting the poor by cutting health care.

Bush's plan to revamp Medicaid includes wiping out Medically Needy, a program that serves uninsured people with catastrophic illnesses. A similar proposal by the Legislature two years ago was dropped after touching off a firestorm of criticism. Other, deeper cuts in Medicaid angered lobbyists for hospitals.

"We were all asked to step in with an open mind to discuss reform. If that's reform, we're not there," said Tony Carvalho, a lobbyist for teaching hospitals, including Tampa General. "We are very disappointed in the level of cuts in the Medicaid budget."

Education spending would rise

Public schools would get $1.1-billion more next year, or 5 percent more per pupil in grades K-12. But half of that increase, or $551-million, is solely for operating costs of the class size amendment voters passed three years ago.

Bush also proposes spending $400-million to start a prekindergarten program.

The governor is relying on another surge in property values to generate about $600-million more in school property taxes.

The governor proposes a 7.5 percent increase in university tuition and a 5 percent increase in community college tuition next year.

Democrats focused their criticism on Bush's proposal to cut taxes while raising tuition or reducing health care. "The governor is once again determined to leave no millionaire behind," said Sen. Walter (Skip) Campbell, D-Fort Lauderdale.

Human services targeted

Bush's single biggest budget goal, one shared by most of the nation's governors, is curbing the growth of Medicaid, which swallows a fourth of the state budget. He has asked the Legislature to curb costs by shifting all Medicaid recipients to private insurance plans to bring more efficiency to the program.

"It's time for us to reform Medicaid now. It's time for us to act before it's too late," Bush said.

Yet, even in a period of economic growth, Bush proposes to eliminate the nearly $400-million Medically Needy program July 1. Those patients would lose all coverage for hospital stays and doctors visits, but retain limited drug coverage.

Unlike other Medicaid programs, Florida is not required to offer Medically Needy, making it an easy target for budget cuts. But for many severely ill people, the program is the difference between life and death. Some health care advocates say cutting the program is shortsighted because participants will be forced to spend so much on health care they will be left impoverished and forced into the regular Medicaid program or wind up in emergency rooms, where hospitals will be forced to eat the cost.

At $14.7-billion, Bush's Medicaid budget is considerably less than the $17-billion state officials have said they need to maintain current levels of service for all 2.3-million Medicaid beneficiaries.

Bush achieved the savings by ending Medically Needy, restricting prescription drug coverage and not granting increases in reimbursement rates for hospitals, doctors, nursing homes and health management companies.

Bush also is proposing ending Medicaid coverage for low-income Medicare recipients as a result of the drug benefit under that federal program, and delaying for another year the nursing home staffing increases lawmakers mandated several years ago.

Tax cuts, other spending

The governor who took office six years ago determined to cut taxes is continuing that pattern.

His new tax cut proposals include continuing a nine-day sales tax holiday on back-to-school purchases, repealing the last remaining part of a per-drink tax on alcoholic beverages, a two-year phase-out of the intangibles tax on savings and tax incentives for building affordable housing and for research and development by manufacturers.

Other Bush budget initiatives include spending an additional $354-million to replenish storm-damaged affordable housing or build new units, and $126-million to build a new prison and add to another.

Bush wants to spend another $300-million to preserve open spaces, $100-million more to rework the Everglades and $72.2-million more for beach renourishment. An antitobacco program would get $4-million next year.

Bush also is offering a 2.5 percent pay raise for most state workers next December.

One counterpoint to Bush's rosy projections is the growing economic disparity between the state's urban and rural areas, with small towns and inland counties falling further behind their more populous counterparts. He proposes spending $15-million a year to assist rural counties, many of which are at the limit of their taxing authority under Florida's Constitution.

But when Bush proposed a rural assistance program last year, legislators refused to go along.

"Clearly, we have to do something different," Bush said.

Legislature's turn

In the Senate, where Bush's fiscal policies have encountered resistance, Senate President Tom Lee, R-Brandon, praised Bush for delivering a plan "with long-term perspective and for providing us with a straightforward assessment of what lies ahead."

Bush said Florida's steady growth in new jobs and a recently improved bond rating prove the soundness of his fiscal policies.

Even a self-styled fiscal conservative such as Bush has not been able to stop growth in spending in the nation's fourth-largest state. In 1999, the year Bush took office, the budget he sent to lawmakers was $46.8-billion. The one he rolled out Tuesday represents a growth in spending of more than one-third since he took office.

Legislators will write their own spending plan and pass it in early May. The governor has the power to veto budget line items.

"I think it sets the framework for what the House does," said Rep. Joe Negron, R-Stuart, the House's chief budget writer. "I think you'll see the House carefully evaluate it. We do have a role for legislative oversight, but the governor's budget is definitely an important starting point."

Times staff writer Joni James contributed to this report.


INTANGIBLES TAX: A two-year phase out. First-year total cost: $132.2-million.

SALES TAX HOLIDAY: Nine-day break on all clothing and books valued at less than $50, and school supplies valued at less than $10. Cost: $35.5-million.

LIQUOR BY-THE-DRINK TAX: Eliminate the tax. Cost: $47.2-million annually.

SUBSTITUTE COMMUNICATIONS SYSTEMS TAX REPEAL: Prohibit implementation of a new tax on businesses that own their own communication systems. Cost: Unknown.

RESEARCH AND DEVELOPMENT EQUIPMENT SALES TAX: Eliminate this tax on businesses. Cost: $33.7-million annually.

MANUFACTURING MACHINERY AND EQUIPMENT SALES TAX: Increased exemption for expanding producers. Cost: $34.8-million annually.

COMMUNITY CONTRIBUTION TAX CREDIT: Extending tax credit to affordable housing and community improvement projects. Cost: $10-million annually for 10 years.

HYDROGEN TECHNOLOGY: A tax incentive package. Cost: $2.1-million.