'Gentle swell' Jeb sees in budget may be tidal wave

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By HOWARD TROXLER

© St. Petersburg Times,
published September 17, 2001

By the end of last week, between the grim events of Tuesday and the onslaught of Tropical Storm Gabrielle, several shellshocked Floridians posed the same grim joke: What misfortune will hit us next? Locusts? Frogs? Hail?

Unfortunately there was, in fact, another real-life piece of bad news for Florida. It was overshadowed by the other events of the week. A group of experts met in Tallahassee and announced that our state is going to have less money to spend this year than it figured.

Because the economy is down, so are the state of Florida's tax collections. The biggest dips are expected in the sales tax, corporate income tax, estate tax and the tax on intangibles (such as stocks and bonds).

The new bottom line: a shortfall of $265-million for the current budget year.

The spin from Gov. Jeb Bush and the state Legislature is that this is only a drop in the bucket. After all, the overall state budget is $51.2-billion this year. We can make up a difference that small just by tightening our belts a little.

Katie Baur, who is the governor's spokeswoman, soothingly compares the shortfall to a boat on the sea encountering a "gentle swell."

But both the governor and the Legislature have a political interest in minimizing the problem. The situation is somewhat worse than stated.

First:

The real reduction in the state's revenue estimate is $673-million, two and a half times larger than the final deficit figure. Only by counting on spending every penny of the state's so-called "rainy-day" money -- the unallocated table scraps and reserves out of the current year's budget -- can the final shortfall be reduced to $265-million.

Second:

That kind of calculation assumes (1) that the rainy-day money will be there, and (2) the economy and tax collections aren't going to get any worse, which they still could.

Third:

By making up the operating shortfall with our table scraps on hand, the state will be using what the accountant-types call "non-recurring" money. Next year, the shortfall will be there again, except worse -- $800-million.

The Bush administration portrays this kind of talk as party-pooping.

"While it is politically popular and makes a great headline to scream we are in deficit," Baur said last week, "this is the time we need to focus on using all the resources we already have available and not create an unnecessary sense of economic crisis in our state."

With no disrespect intended toward Baur, who is my good friend, this is the first time anybody has ever called it "politically popular" to declare there is a budget deficit.

In fact, it is Bush who is trying to take the easier and more "popular" route by minimizing the extent of the problem.

The politics at work here is that the governor along with his allies in the Legislature have two contradictory goals. They have to please their tax-cutting, big-business base of support, which they have served well by enacting tax cuts.

At the same time, however, they cannot be seen as being outright hostile to education, to social services or other good-guy stuff. They cannot be seen as driving Florida further into second-rate status.

If the Legislature now had to meet in an emergency session to cut the budget, the minority Democrats would throw the Republicans' tax cuts back in their face. Deciding what services to cut would be messy and unpleasant and, worst of all, high-profile.

However, the governor and Legislature are spared this unpleasantness for now. State law requires the Legislature to meet only when the deficit exceeds 1.5 percent of general-revenue spending. Otherwise, the cuts can be made by committees and bureaucrats with less of a stir.

Last week, when the experts from the Legislature and governor's office added up the official new estimate, the figure was only 1.3 percent. What a fortunate turn of events!

- You can reach Howard Troxler at (727) 893-8505 or at troxler@sptimes.com.

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