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    Little spared in Bush's proposed budget cuts

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    © St. Petersburg Times, published February 25, 2001

    A myth is afoot that Florida has a financial crisis, but the real issue is about ideology, not economics. As most legislators cringe at budget cuts that would not spare even the blind, Gov. Jeb Bush and his allies continue to demand yet another round of tax cuts. Having dug itself into a hole, will the Legislature this year shovel even deeper?

    The only certain answer is that the next two months will be a wild ride. Not even Huey Long governed with a more compliant legislature than Bush has had in Florida so far, but that was when there was money to spare. Now the Republicans are learning the down side to being in power.

    "You're cutting Healthy Start, and we're going to have an intangibles tax cut?" argues Senate Democratic leader Tom Rossin. "The Republicans said they wanted to be in charge. Now they're stuck with governing, and I think they're not doing a very good job."

    * * *

    Not much can shock seasoned politicians, but it has been happening to the Legislature's budget writers as they look into the teeth of a $900-million dilemma that can be resolved only by cutting popular programs or by repealing recent tax cuts and postponing new ones.

    Members of Sen. Don Sullivan's education appropriations subcommittee have been openly restive as they contemplated $441-million in assorted reductions proposed by Bush or by Sullivan, who was doling out what the Senate leadership had allotted to him. Little would be spared, not excluding the School for the Deaf and Blind at St. Augustine, which would lose $1.8-million and which warned at a subcommittee hearing Thursday that it would have to send home as many as 150 students.

    "More burdens on the families, more burdens on the school systems," acknowledged Sen. Les Miller, D-Tampa.

    The public schools would take the biggest hit, getting essentially no new state money for the first time since the '90s recession. They would meet enrollment growth, but nothing more, through fatter property tax rolls and diverted pension contributions.

    "We have trouble recruiting teachers in this state, and you make cuts," scolded Wayne Blanton, executive director of the Florida School Boards Association. "We have trouble retaining teachers, and you make cuts. . . . The message here is that education is not as imporant as it was in the past. This is an unacceptable budget. These are unacceptable cuts. We expect and hope that you will honor your commitments when you ran."

    Sullivan's list also cut deeply into statewide programs for children with epilepsy, autism and other disabilities and into the budgets for the fledgling law schools of Florida International University and Florida A & M as well as the new medical school at Florida State. It would eliminate the teacher seminar program of the Florida Humanities Council, which shares a new university building in St. Petersburg the state spent $5-million to construct, along with the entire education program of the Tampa Bay Holocaust Museum.

    "I understand the stress this budget is going to cause all of you," Sullivan had warned his members, ". . . but it doesn't get any better, so hang in there."

    Indeed it doesn't. Even as the session begins, updated revenue estimates provide worse news, including an extra 35,000 public school students who weren't factored into Gov. Jeb Bush's $46.6-billion budget for the fiscal year beginning July 1, and a $200-million drop in the revenue forecast on which he based it.

    The budget would spend $1.1-billion more, the same increase as last year. But Medicaid has a claim to two-thirds of that, mostly due to higher caseloads and what state economists call "skyrocketing" pharmaceutical costs. Bush's tax cut plan -- chiefly another reduction in the intangibles tax on securities -- would consume the rest, with nothing to spare for enrollment increases or inflation anywhere else. The result is a budget debate that is already the most painful since the recession.

    The Medicaid problem is, in part, a success story. More children were brought in who belonged all along but had been left out. Bush calls that a "historic increase" in the number of people who are insured.

    But it comes with prices to pay.

    In Bush's budget, Medicaid patients would be forced into HMOs that appear unready for them, more than 4,000 state jobs would be "outsourced," the Supreme Court's request for new judges would be ignored once again, and counties would be billed for $62-billion the state presently pays to hold juveniles for trial.

    Even Healthy Start, the widely praised prenatal program for low-income women, is on the chopping block: a third less for administration, 10 fewer coalitions, and a $37-million "saving" that would exclude as many as 20,000 women from eligibility.

    "These are the cuts that never heal," protests Jack Levine, president of the Center for Florida's Children.

    "If the budget comes out this way, I'm going to vote no," says Sen. Debbie Wasserman-Schultz, D-Davie, who has voted for every appropriations bill since coming to the Legislature in 1992. "I'm not going to stab people in the heart. This year, no way."

    * * *

    Marshall Ogletree, the Florida Education Association's budget expert, calls the current situation "a philosophy recession." Cutting taxes has been Bush's highest priority, and his budget boasts that he will have saved taxpayers $6.1-billion by 2003 if the Legislature doesn't stray off course. In effect, he has made a necessity out of what he would call a virtue.

    "The reduced needs of a smaller, more efficient government naturally afford the opportunity for a continuing program of tax relief for Floridians," said the budget.

    In fact, the tax cuts have become the horse, dragging a cartful of budget cuts behind them. They cost an assorted $512-million last year, including lower taxes on intangibles and on booze and the popular preschool sales tax "holiday." Bush wants another $285-million this session, including more intangibles relief and the holiday, and House Speaker Tom Feeney wants to top that by another $100-million or so.

    But the Democrats have drawn a line. Though they can't stop anything by themselves, there are Republicans who are straining, too, especially in the Senate, whose larger districts typically include more diverse constituencies than House districts do. There, the intangibles cut is not a sure thing. Other eyes are coveting the $180-million Bush wants to leave in a reserve called the working capital fund, which isn't constitutionally required. And Democrats are talking of raising the required local taxes for schools, which were cut just two years ago.

    * * *

    "This is not an exercise. This is real," the Senate appropriations chairman, Jim Horne, R-Orange Park, warned colleagues. He told his subcommittees to identify $945-million in cuts but said he is confident some of that will eventually be spared. Significantly, those allocations did not take any more tax cuts into account. Horne said they're not a given; they'll be weighed along with everything else.

    Tempers are already fraying. On Thursday, as scores of people waited to protest the cuts, Sen. Jack Latvala, R-Palm Harbor, got into a verbal dustup with Sullivan over when the committee would have a chance to vote. "I think one of the reasons I provided as much detail as I did," says Sullivan, "was to let legislators know that if they proceed in the direction we are headed, there will be some cuts we can't afford to live with, and I wanted everyone to understand this. . . . I don't believe right now that they really believe it's true."

    Some of the proposed cuts make sense only in ideological concept.

    One example: Bush's budget proposes to end $302,000 a year in state aid to Planned Parenthood clinics in Duval, Collier and Sarasota counties on the pretext that they serve a "limited geographic area" and that the funds can be better spent on "priority services on a statewide basis."

    According to Barbara Zdravecky, who heads Planned Parenthood in central and southwest Florida, the administration's priority is to spend more on an abstinence program that is primarily managed by religious organizations.

    "The people in this state who support sexuality education have to understand that what they're getting funded is "just say no.' It's a shame-based curriculum. . . . You know who really are the targets? Women who have just gotten off welfare, who no longer have medical benefits, who are working at just above the minimum wage. . . . All this money that had been invested in so-called welfare reform will be moot. If a woman can't keep from getting pregnant, how's she going to stay on the job?"

    Moreover, she says, every dollar not spent on family planning costs $24 in subsequent social services.

    Debatable policy initiatives abound.

    To make the privatizing pill more palatable, House Republicans are proposing to let public employees bid against private vendors to supply goods and services to their own agencies, which would require the repeal of ethics laws that explicitly prohibit such self-dealing. Such a bill hasn't surfaced yet, but there is one to exempt employee bids from public disclosure prior to contract awards. Otherwise, says a House staff report, competition might be "stifled."

    The administration projects a $67-million saving from requiring Medicaid recipients, primarily children, to be in HMOs in counties -- presently 27 -- where there are at least two from which to choose. But the sickest patients and the chronically ill would remain in the state's basic Medipass program, even as the state eliminates the $3 per patient it pays physicians and clinics to be their case managers. Florida pediatricians and community health centers denounce this as a boondoggle for the Medicaid HMO industry and a disaster for the clinics, which also serve 235,000 people who have no insurance of any kind. The result, they warn, will be a deluge of sicker patients for hospital emergency rooms, which will have to pass the burden on to local governments and insured patients.

    Opponents challenge whether the Medicaid HMOs can handle a windfall of more than 200,000 new patients. Dr. Louis B. St. Petery Jr., a Tallahassee pediatric cardiologist, has told legislators of three Tallahassee children whose new HMO assigned them to a pediatrician in Jacksonville, 150 miles away. In Tallahassee, he said, the HMO's entire panel for children consisted of two pediatricians who had quit the HMO, another who could not legally take any more Medicaid patients, and two family care practitioners.

    "They're allowing this HMO to collect capitation (monthly fees) from the state and then assign patients to providers to whom they couldn't possibly go. That sounds to me like it borders on fraudulent activity," he said.

    Some of the state's savings will be costly to local governments and their taxpayers. For example, the state would save nearly $50-million by dropping its "medically needy" program, which serves roughly 23,000 uninsured people who wouldn't be Medicaid-eligible but who suffer very costly illnesses. However, that means forfeiting another $65-million in federal matching funds, and, as budget documents concede, "the costs will probably be shifted to charity hospitals which may already be overburdened."

    Similarly, food-service personnel, custodians, payroll clerks and others whose state jobs are privatized will likely wind up without health insurance (or pensions) and become a burden to local hospitals. The governor says that the state should prefer contractors who offer insurance, but there's no guarantee it will happen.

    The state would save $7-million by no longer providing supervision for pre-trial intervention. But if the counties don't replace it, prosecutors won't trust the system, meaning more trials, more sentences and more jails.

    * * *

    Only two House Democrats voted no when last year's session paid the second installment on Bush's pledge to repeal the intangibles tax entirely. One of the two was Lois Frankel, the House Democratic leader, who has been quietly -- and effectively -- lobbying the minority to draw the line on further cuts.

    "Not now, not this year, not when there are children who need to be educated, seniors who need their medicine. Shame on us, to take the dollars and give them to wealthy Floridians," says Frankel, who is considering running for governor against Bush.

    The House Fiscal Resources Council split 14-7 along party lines last week to cut the tax to 50 cents (from $1) for each $1,000 in taxable securities. At almost the same time, however, the Senate Republican leadership postponed committee action on its intangibles tax bill.

    "That's going to be reviewed," said Majority Leader Jim King, R-Jacksonville. "I think every one of the tax cuts and tax relief situations will be reviewed against the budget."

    Few people pay what's left of the Florida intangibles tax. The Center on Budget and Policy Priorities in Washington estimates that 64 percent comes from corporations and individuals whose holdings exceed $1-million, which makes it "perhaps the most progressive part of Florida's tax system." Florida Republicans, on the other hand, call it a tax on "seniors and savers."

    Bank accounts are exempt. So are securities held in IRAs, 401(k) plans and other retirement accounts, and there's a $20,000 exemption -- $40,000 for couples -- before the tax begins to apply.

    House Democrats counter the GOP plan with a proposal to keep the rate but increase the floor to $100,000 for individuals and $200,000 for couples. This, they say, would take another 207,000 people off the rolls but cost only $83-million a year.

    They have lost two committee votes over that. Rep. Paula Dockery, R-Lakeland, whose financial disclosure shows substantial stocks subject to the tax, objected Tuesday that the Democratic alternative would mean "less people out there wanting the tax to go away."

    Other Republicans repeated the mantra: a promise is a promise.

    "I'm not breaking our other promises in order to keep this promise," countered Rep. Suzanne Kosmas, D-New Smyrna Beach.

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