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    Legislators agree to cut taxes a bit

    The compromise also adds money - not enough, Democrats say - for social services.

    By DIANE RADO and TIM NICKENS

    © St. Petersburg Times, published April 25, 2001


    photo
    Feeney
    photo
    McKay
    TALLAHASSEE -- Florida residents will see a tax cut for the third consecutive year, but it won't be nearly as large as the previous ones under Gov. Jeb Bush and the Republican-controlled Legislature.

    Some $175-million in tax cuts would be offered in the budget year that starts July 1, under an agreement between legislative leaders, brokered by Bush and Lt. Gov. Frank Brogan.

    The cuts will include the popular tax-free shopping period before school starts, and a cut in the intangibles tax on stocks, bonds and other investments.

    The shopping holiday will likely last three days rather than the nine days proposed by the governor. And the intangibles tax cut probably will raise the exemption levels rather than cut the tax rate itself, legislative leaders said.

    The agreement announced Tuesday came after Senate President John McKay and House Speaker Tom Feeney met privately in the Capitol for about an hour, over coffee and bagels. The lawmakers did not notify the public of the meeting in advance.

    Voters approved a change to the Florida Constitution in 1990 that requires all prearranged meetings involving the governor, the Senate president or the House speaker to be "reasonably open to the public" if the purpose of the meetings is to agree on legislation.

    McKay initially said he did not think the meeting broke any state laws or ethics rules. An hour later, he e-mailed reporters and said he had reviewed Senate rules and concluded the meeting should have been noticed.

    "I apologize for my error," McKay wrote.

    In addition to tax cuts, the agreement also will provide an extra $66-million for health care for poor people, nursing home improvements and other social services.

    "Everyone makes out," Brogan said.

    But Democrats remain critical of the tax cuts, saying the state is not meeting pressing needs in education and other areas. For example, the House's spending proposals cut benefits to some 190,000 poor adults who get eyeglasses, hearing aides and dentures from the state. Public schools are expected to see just a token increase in spending after accounting for inflation and thousands of new students.

    "It is not responsible and not responsive," said House Minority Leader Lois Frankel, D-West Palm Beach.

    The $175-million in tax cuts, part of a budget of about $53-billion, are modest compared with the previous two years. Bush has signed into law more than $1.6-billion in total tax cuts since taking office.

    But a slowing economy and skyrocketing Medicaid costs have tightened the state's finances. Republicans said the deal reflects their commitment to cutting taxes and still meeting the state's needs.

    Bush called the deal "a progressive, good, solid Republican budget" hours before it was announced.

    The agreement breaks a logjam on the budget that threatened to put the Legislature in overtime. Now, negotiations between the House and Senate can start in earnest, although legislative leaders were still not promising to get out on schedule on May 4.

    The House had initially sought $355-million in tax cuts, while the Senate did not include any tax cuts in its initial spending plan.

    Bush and Brogan acted as peace negotiators in a series of telephone calls and private meetings with legislative leaders.

    "I wouldn't really call it pressure," Senate Appropriations Chairman Jim Horne, R-Orange Park, said of the governor's involvement. "I think he was a great facilitator to keep communication lines open, because you had two starkly different approaches to the budget."

    McKay had said the state couldn't afford tax cuts in year when lawmakers were grappling with a nearly $1-billion shortfall in the state's Medicaid program.

    But McKay ultimately retreated in the face of political reality. Feeney wasn't going to back off entirely from his commitment to tax cuts, and Bush also insisted that the state could cut taxes while increasing education spending and avoiding a cut in services for Medicaid recipients.

    A smiling Brogan and Horne joined Feeney at the podium in the House chamber about 5:10 p.m. Horne raised both hands into the air -- and crossed his fingers.

    To break the budget deadlock, negotiators scraped up $145-million in new money. The largest portion, $109-million, is expected to come from recalculating how much the state is expected to receive in 2001-02 as part of its 1997 settlement with tobacco companies. Of that figure, $60-million will stem from efforts to recoup money that the state should have been collecting from tobacco companies for the past three years, Horne said. Legislation will likely be needed to go after those funds. An additional $30-million is expected to come from an attempt to better manage the number of drugs being prescribed to certain Medicaid patients. Some patients are getting at least 20 drugs at a time.

    Under the agreement, legislators would restore $19-million in proposed cuts to some 1,800 elderly and disabled people receiving broad Medicaid benefits, and spend $23-million more for programs for the developmentally disabled. The state would spend $16-million on nursing home reforms, and $8-million on the Healthy Kids program that legislators had expected local governments to pay.

    Lawmakers found the new money after McKay assigned Horne, a certified public accountant, to comb through the budget and find "efficiencies," but "not the kind that will result in loss of services and loss of jobs," McKay said.

    The agreement doesn't mean that the budget work is done. Lawmakers still differ on a host of proposals, including how much to spend on heath care and education. The House, for example, wants a tuition increase for college students, but the Senate has not included that in its spending plan.

    The House and Senate must approve a final budget, and the governor has the power to veto specific items.

    Groups protest Medicaid cuts

    Representatives of physicians, patients and other health care interest groups gathered at Tampa General Hospital on Tuesday to protest Medicaid cuts of up to $700-million that are in the governor's budget.

    The groups, including the Florida Academy of Family Physicians, the Mental Health Association of Greater Tampa and the National Kidney Foundation, said the cuts would make it more difficult for the poor to obtain expensive prescription drugs, especially those with AIDS or mental illness. The cuts also would reduce reimbursements for doctors, they said.

    Dr. Gene Copella, executive director of Florida AIDS Action and a professor of public policy and medical ethics at the University of South Florida medical school, said coverage for many working poor could be lost, as could $400-million in matching federal funds for Medicaid.

    "We're just now seeing the benefits of some of the advanced (AIDS) treatments" that could be cut under the budget, he said.

    Florida has about 1.9-million on Medicaid, the government insurance program for the poor. The groups argued it needs more money, not less.

    - Times staff writer

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