After watching the prelude for weeks, the Florida Legislature and its Republican leaders will finally put pen to paper this week (so to speak) and release their detailed spending plans for the coming fiscal year.
After listening to leaders in the House and Senate discuss their priorities, the expectations are that the rival budgets could be widely divergent in what they cut, what they keep and what they enhance.
There are a multiple reasons for that, whether it's Senate President Joe Negron's push for increased money for state universities, or House Speaker Richard Corcoran's insistence that the state shutter its economic development agency Enterprise Florida.
But less noticed is that the House, Senate and Gov. Rick Scott have chosen to include information that supports their arguments, while seemingly sidestepping other salient points. This could influence the tenor of the debate that is about to intensify.
So it might be worthwhile and step back for just a second to recall how everybody got here and what's important to remember for the budget battle that still lies ahead.
So here's a few things to understand:
DON'T CALL IT A DEFICIT: There is no budget deficit this year. Plain and simple.
To understand the underlying budget situation, it's important to realize this. In Florida a deficit occurs when the state collects less money than what is needed to pay for things that are in the budget.
Florida's tax collections are in fact growing. The main budget account - known as the general revenue account - is expected to grow in the current fiscal year by 4.4 percent, or $1.23 billion. This same account, which relies on a variety of tax sources but primarily the state's sales tax, is expected to grow $1.16 billion - or 3.9 percent - in the fiscal year that starts on July 1. That's a stark difference from the depths of The Great Recession when legislators were required to cut spending (or in 2009 raises taxes) to make the math work.
So then where does the confusion lie?
Well, let's start with a document called the Long-Range Financial Outlook. Thanks to current Sen. Tom Lee, the voters in 2006 approved a constitutional amendment that requires the development of an outlook that looks out over a three-year period and reviews both sides of the ledger - the expected spending and the revenue coming in.
The outlook comes out once a year. The one approved in September found that when balanced together legislators had a windfall of only $7.5 million for the 2017-18 fiscal year. And the economists and analysts who put it together warned of a "structural imbalance" that could create a sizable budget gap in the years to follow. That has sparked talk of deep budget cuts including a House plan to cut at least $1.4 billion alone in the coming year.
But it's important to remember this budget gap is a summary of both revenues - and expenses.
The long-range outlook put together assumes nearly 50 different expenditures - and that greatly impacts the bottom line.
Let's start with tax cuts: The overall outlook assumes that there will be $254 million in recurring tax cuts in each of the next three years. This is based on a historical average in recent years, but the point is this, part of the projected gap is based on the assumption that legislators will continue to cut taxes, which adds to the potential shortfall, which helps trigger the need for cuts elsewhere to close that gap.
The budget shortfall or gap that is projected to occur is also driven by a long line of other spending decisions where economists plugged in the numbers based on historical decisions made by legislators: The outlook assumes a $1 billion reserve on top of other existing budget reserves. It assumes that legislators will fully fund increased enrollment in public schools, pay for increases in Medicaid, and set aside more than $400 million over the next three years to pay for increased costs associated with the state employee health insurance program.
But there's more - the outlook assumes an increase of per-student funding above enrollment growth, grants to libraries and museums, local government park grants, and in the out years money spent on replacing a law-enforcement radio system and the replacement of Florida's accounting system.
So what does that mean? In reality, the budget debate is one about choices.
Do legislators choose to keep cutting taxes? Do they choose to keep spending money on certain things? Do they choose to make deep cuts due to a philosophical belief that government is too big and too expensive? Do they refuse to revisit past decisions that contribute to their structural imbalance - including for example - decisions to give out tax credits to various businesses. This could include anything from the insurance tax credit that is targeted by the Senate, or the tax credit scholarship program that continues to grow. (The amount of tax credits available for the scholarship program is projected to increase from $559 million this fiscal year to nearly $699 million next year.)
THE SCHOOL TAX DEBATE: If there is one item that could derail the entire budget process it's the thorny annual dilemma over school property taxes.
Here's the problem: As property values rise, this translates into more money collected by local school districts that could be spent on public schools. In other words, if the value of your home goes up you will pay more in taxes in the coming year - unless the tax rate is lowered by an equal amount to offset the increase in values.
Legislators don't appropriate this local property tax money - BUT - they do draw up spending plans that assumes a mixture of both local and state funding. This is known as the Florida Education Finance Program or FEFP and districts that wish to draw down the state funding must collect a certain amount of money. (This is known as the required local effort or RLE.)
Republican leaders, including Scott, have used these increased local tax dollars to boost the overall amount spent on public schools. Some legislators have defended the practice by noting when property values plunged during the Great Recession that the state helped offset the loss (but not completely.)
But Corcoran has vowed that he will not let this happen this year - and he's taken a much stronger stance on this than practically every other spending item in play.
Important piece of history: Corcoran was chief of staff for then-House Speaker Marco Rubio when the Legislature waged a lengthy debate over property taxes during a time when Florida's real-estate market was super heated. The position of the GOP-controlled Legislature at the time was pretty simple: If local governments take in more tax dollars because of rising values, then it's a tax increase. Legislators forced cities and counties to roll back their tax rates. So Corcoran is being consistent with that position. (Also worth noting: Several senators, then in the Florida House, also took that position. Dennis Baxley, Anitere Flores, Bill Galvano, Denise Grimsley and Perry Thurston voted in favor of the bill to force local tax rollbacks.)
Scott has maintained that this isn't a tax increase and his own budget recommendation relies on nearly $558 million in increased local school taxes to help pay for an overall 3 percent increase in per-student funding. Scott has tried to suggest this is no different than if the price of a car goes up and you pay higher taxes because of the higher price. Yeah, but the government doesn't set the price of a car. In this instance government at both the state and local level have a hand in deciding how much property owners will spend.
BREAKING DOWN OTHER FLASHPOINTS...Quick hits on remaining things to look for and understand:
GAMBLING: Right now all these budget projections being thrown out do not assume any changes in Florida's gambling laws or a new compact with the Seminole Tribe. That means if - and it's a pretty big if - legislators could stroke a deal with the Seminoles and the rest of the players in the seemingly intractable gambling turf war it could provide an injection of cash that could help smooth things over.
GULF COAST SPILL MONEY: While this may not command a lot of attention around the state, the ongoing tug-of-war over money the state received as part of a settlement over the 2010 BP oil spill in the Gulf of Mexico is part of the overall dynamic that will decide how this session ends up. The state last year got $400 million as its first installment. Under an existing law some $300 million is supposed to go to eight Panhandle counties that were impacted the most by the spill. But the Legislature has to yet to agree to send the money out the door.
Corcoran and House leaders didn't like the arrangement allowed under the existing law so they have crafted a bill that places more oversight on the spending - and prohibits any of the money being used on economic development projects. The Senate so far has a different approach and they have not agreed to all the House restrictions. This money is a big, big deal to the Panhandle Republicans and in Tallahassee parlance - this is their going home bill - meaning they can't go home unless they get it worked out.
ECONOMIC DEVELOPMENT: This item has gotten plenty of press especially since it has triggered a feud between Scott - who wants to keep funding intact for the state's economic development agency - and House leaders who want to eliminate Enterprise Florida and scale back Visit Florida, the tourism marking agency. The Senate so far is siding with Scott. The question is will they remain in sync with the governor all the way to the finish line.
HIGHER EDUCATION: Negron's bid to increase funding to state universities as part of an effort to propel them into the top ranks of the nation's public colleges is going to be rebuffed by House leaders who contend that universities are misspending what they have now (some of which came with the help of legislators who placed projects into university spending lines.) The one word of caution in this debate is that numbers get thrown around sometimes without a clear sense of what they mean.
Universities are dependent on several streams of funding and it appears so far that the House is lumping everything in to make an argument about overall spending. There are differences between straight state funding and the money that universities take in from other sources - whether it's tuition, money from federal grants, or money medical schools earn from seeing patients. For example, the amount of tuition money can go up even if the rates don't because universities admit more students. T
The House has zeroed in on spending among the foundations and whether it's proper for the universities to use state funding to subsidize fundraising operations. So far, the universities have had a muted response and not given a clear explanation as to practice. One big question is whether or not the House will advocate for blocking universities from using their foundations to pay university employees above state limits.
TRUST FUNDS: It's important to remember that some taxes and fees charged by the state don't wind up in the main budget account. Instead they are set aside in what are known as trust funds. Year in and year out special interests groups argue that money collected in these funds belong to them. And year after year the Legislature politely ignores this and transfers money of these trust funds and uses to help balance the budget.
SPEND NOW, PAY LATER? Unlike the federal government, Florida is required to have a balanced budget every year. That doesn't mean of course the state doesn't have debt. It does.
Until Scott came into office, past governors and legislators authorized borrowing for fixed capital costs such as building college buildings, roads and acquiring environmentally-sensitive lands. Scott started drawing a firm line about this and led the charge to push down the state's debt load. As of last June, it was $24.1 billion or more than $4 billion lower than it was when Scott came into office.
Negron's plan to build a reservoir south of Lake Okeechobee calls for increased borrowing. Currently the bill moving authorizes more than $3 billion in bonding authority to go to various projects, but with an estimated $1.2 billion going to the reservoir project. But that's not what is needed right away in this year's budget.
If the plan is approved it would carry an estimated $100 million price-tag to this year's budget since the bonds would be paid back over 20 years in installments.
So Negron's plan has an immediate cost to the treasury, but it's also important to understand that the full amount of his project will not included in this year's budget.
BOTTOM LINE: Under the current schedule legislators are operating under the House and Senate are expected to pass their budgets during the second week of April.
That week is already truncated because of religious holidays so it is highly unlikely that any negotiations or work can begin until April 17. That means legislators will have about 15 days to get everything worked out in order to get a budget finished on time. That's because Florida law requires the budget to be finished 72 hours before the final vote.
So that's a lot of ground to cover in a short amount of time. Besides the above-mentioned topics there's other issues at play, including pay raises, more money for charter schools etc.
The clock is ticking.