An extra $1-billion may bail Citizens
Economists find even more extra money in the state's budget than they thought was there, and homeowner's insurance bills may benefit.
By JENNIFER LIBERTO
Published April 13, 2006
TALLAHASSEE - A bailout of Florida's troubled state-run insurance company moved up on the state's agenda Wednesday when state economists told lawmakers they have an extra $1-billion in tax revenue to spend.
When legislators return for the final three weeks of the legislative session next week, the additional money could change the fortunes of the once-unpopular plan to help Citizens Property Insurance Corp. out of its $1.7-billion deficit.
Without help from the state's general revenue account, taxpayers are on the hook.
"There's definitely support building in the House and Senate to put together an innovative proposal to help Floridians to pay their Citizens' assessments," said the House budget chief, Rep. Joe Negron, R-Stuart.
State economists adjusted their estimates Wednesday to show an unanticipated $1.2-billion more in tax revenue that lawmakers could use in hammering out their budgets next week. This is in addition to the $3.2-billion surplus that already was projected. Budget writers in the House and Senate already had so much money to work with they left about $2.3-billion unspent to resolve their differences.
The extra money includes $960.2-million in extra tax revenue and $240-million from what economists called "bookkeeping" measures, basically 2005-06 dollars that didn't get used for such things as Medicaid expenses.
Several lawmakers said Wednesday they're more inclined, on hearing the reports of the extra revenue dollars, to pay down the deficit Citizens has racked up with mounting hurricane claims. It's an idea echoed promptly on Wednesday by Chief Financial Officer Tom Gallagher.
Gallagher, among the first to take up the call to relieve Citizens earlier this year, issued a statement urging support for such a measure.
"Providing rate relief for Florida's families using surplus tax dollars is good public policy and I'm encouraged by the growing support for it from Gov. Bush and state lawmakers," he said.
While Citizens is the insurer of last resort, providing insurance to property owners who can't find coverage from private carriers, state law requires that Citizens charge assessments on all Florida property insurance policyholders to remain financially solvent. Even those not insured by Citizens must pay when Citizens runs a deficit.
Florida policyholders are paying about 7 percent more on this year's premiums to cover Citizens' 2004 deficit of $516-million. Last month, Citizens said its deficit from 2005 hurricanes had swelled to $1.7-billion, an amount that would require an assessment of $195 on each $1,000 worth of insurance premiums in the state in 2007.
Both Senate President Tom Lee, R-Valrico, and Gov. Jeb Bush have recently said they would support some type of Citizens bailout. Bush had long been opposed, but in recent weeks he warmed to the idea.
"I truly believe we ought to take some of that money and reduce or do away with the deficit at Citizens," said Sen. Mike Fasano, R-New Port Richey. "It was money we didn't expect, let's give it back to the people and what better way than in homeowners' premiums."
The extra $1-billion came from the same areas that gave the state an extra $3.2-billion last November; more tax revenue paid on real estate transfers and stocks and bonds or investment portfolios. It also came from "marginally" stronger sales tax revenue.
Yet, the forecast came with a caution. The Florida economy, while still strong, can't keep up such a pace. Already, state economists see indicators that higher interest rates and increased housing costs are weakening the housing market and will mean less tax revenue collections in coming years.
"We want to stress that there's more downside and uncertainty ahead," said Amy Baker, the chief analyst for the Legislature's joint Office of Economic and Demographic Research."But we remain optimistic that the strength of Florida's overall economy will carry us through."
Indeed, Bush and Lee urged lawmakers to put the extra billion in the bank for stormier times ahead.
Several Democrats said they agree that some of the money needs to be saved, but they also mentioned the Citizens bailout as something lawmakers should give more weight to.
"We need to put $500-million in Citizens insurance that would help bring the assessment down, so there won't be assesment on top of the premiums," said Senate Minority Leader Les Miller, D-Tampa.
Several budget gurus, including Rep. Rep. Joe Pickens, R-Palatka, who runs a House education budget committee, said his panel expects the extra money also will make budget negotiations go more smoothly, especially on issues such as education and tax cuts, where discrepancies remain between the House and Senate budgets.