The Florida economy may be humming along, but there is a budget problem looming for state lawmakers. In about a year and a half, the state is forecast to see a $1 billion difference between what it collects in taxes and fees and what it spends.That is a $1.3 billion budget hole. Legislators will start tackling the anticipated budget shortfall in their next session before the red ink starts.
WLRN spoke with the top Republican and top Democrat on the Florida House Appropriations Committee, Carlos Trujillo and Jared Moskowitz, about state spending priorities, including health care, education, tourism and economic development.
Trujillo: If you look at it in actual dollar amounts, it's only a $7 million surplus for this fiscal year. If you look at the Fiscal Year 2017-18 it's a $1.6 billion deficit. So we are heading into a mini-recession here in Florida. We have a great revenue stream in Florida. We really have a spending problem. Part of our mission and our task for the next two years is to control those expenditures.
Moskowitz: There's plenty areas in which we are spending too much money, but we also have to deal with costs of certain things. We don't control the costs of health care. You can make an argument that we can control some of the costs of education, but the cost of education is also increasing. There is no question that there is spending that can be cut from the budget to try to offset the budget deficit that's coming in the next fiscal year. The demand is also increasing for government services represented.
What's going to make the difference?
Trujillo: Decisions. We're going have to make tough decisions. We're going to decide what are our priorities and we will not go into the following session with the $1.7 billion shortfall. We need to start tackling those decisions this session.
Why the shortfall in revenue if the Florida economy is growing?
Trujillo: It's not a shortfall in revenue. I think it's the exasperation of expenditures. If you look at last year in Tallahassee, the rollback for the local property tax rate, the state put in $500 million so that people's local property taxes would not go up. What ends up happening is that the property values continue to go up. Governments [are] used to that money and they will continue to grow to meet every single last dollar they collect in revenue. Tallahassee is absolutely no different. We have to be cognizant of what programs are necessary? What programs are required by the state and which ones are we are going to continue to fund?
Also member projects. In the last seven, eight, nine years, there are about about $700 million of member projects. They're all recurring. You're committing future legislatures to spend on your turkey projects. That's one thing that we're going to completely revisit. We're also going to revisit within state agencies and within Medicaid and within education we need to be more efficient and ways to be more transparent with our money.
Any interest in tax cuts?
Moskowitz: I don't think you're going to see a large tax cut. You might see a targeted tax cut for taxes that the House and the Senate and the governor believe no longer work. There's no question that there needs to be a realignment of the priorities. Whether that's member projects or whether that's government money going to corporations or whether it's tax credits, state government needs to look at the basic services that they need to provide. That's where they should start.
Trujillo: It will be very difficult for tax cuts. We would like to make a real push for savings as a state. We have an $83.5 billion budget. We have $3 billion in reserves. We're very light on reserves. It's incumbent upon us to really start saving money. The economy is cyclical. It's going up and eventually it'll come back down and we need to make sure that we have enough reserves in order to get us through those bad times.
Trujillo: There's a change in administration. I think that'll change a lot. If you look at what happened with health care funding nationally, why was Florida treated so differently? Because we wouldn't expand Medicaid.
Moskowitz: It wouldn't surprise me if the federal government and the state of Florida, which clearly have had an adversarial role for the last several years on a dozen topics, if that adversarial relationship disappeared, that is going to benefit Florida in a number of ways.
How much more money would you want for Medicaid in Florida, including the federally funded LIP (Low Income Pool) which is scheduled to be eliminated?
Trujillo: We wouldn't want more money. What we want is flexibility in the spending. What we want is when the federal government gives us our money for Medicaid don't tell us all the different ways that are inefficient and ineffective and how we have to use it. Just tell us, "Here's your money for Medicaid. This is a population you have to cover. Figure it out." Give the states a flexibility to identify the needs of their population and to meet those needs.
Moskowitz: I agree with that. I'm not OK with [the Low Income Pool funding] going to zero. We send so much money to Washington D.C. I don't see why that money shouldn't come back to our residents. Maybe it's not going to go back to the $2 billion we were getting, but going to zero is not where it should be. Until the federal government figures it out and we know whether they're going to block grants to the States [for Medicaid], I do think they need to send some money back to the state of Florida for health care.
Trujillo: The state sends these monies to hospitals and a lot of them are very meritorious. But it's not guided by utilization or outcomes. It's just, "Here's a bunch of money. You see people who are indigent. We wish you the best of luck." What we need are outcomes based on populations. And that's the only way to really control health care costs. That's the model we're looking for.
Moskowitz: If the federal government is sending money to other states, whether it's LIP or whatever you want to call IT, that money we get shouldn't be at zero. You can call it whatever you want. You can call it block grants. What's a block grant? It's money. If the federal government is sending money to states for low income pool or for something else I don't think we can leave that money on the table. I don't think with Gov. Scott's relationship with the president-elect we'll leave that money on the table. I might be wrong.
Is there enough money so that services continue at the level patients have come to expect?
Trujillo: There is. Do I think with flexibility we could do with a lot less money? Absolutely. I think a lot of the programs are benefit-rich. The real focus should be on health care outcomes and providing quality health care to people. Across the entire health care system there's no accountability. There's very limited access and there's no transparency in pricing. Without transparency in pricing you'll never have a competitive market.
Trujillo: I would say [per student funding] is going to be basically flat line. If you look at what the average child here in Miami-Dade County is receiving in state money, it's about $7,200. That's right. That's per student funding. If you look at that amount you're putting into that classroom of 25 students, $7,000 per student, that's a significant amount of money. That classroom is generating $200,000 for the school district not including the capital projects and the maintenance. That's separate. They're paying that teacher $50,000 - $65,000 a year. What's happening to the rest of the money? Those are questions that parents have to ask. If we're sending all this money into this classroom and that classroom is generating $200,000, what's happening to the excess? Administration and bureaucracy weigh down the systems. It's really the problem of public education. They receive enough money.
Moskowitz: I'm from Broward County which just a year ago had to pass an $800 million bond to take care of our schools. That is evidence that at the school board level something is broken. There is no reason that they should have had to go back to the taxpayers. That's years and years of mismanagement. We're spending money per student just like we're spending money on health care. Where's the money going? What are the outcomes what are we getting for that? Let me ask you about the funding on education when it comes to property taxes. You referred to this earlier in our conversation about the state Legislature essentially taking about a half billion dollars so that the state portion of property taxes didn't increase by that amount because of rising property values. Will you do it again if property values continue to go up?
Will the state contribute money so homeowners don't see higher local property taxes because of higher property values?
Trujillo: Property values are going up. Last year, it cost us $550 billion. Are we willing to spend another $550 billion as a state in order to ensure that the local property taxes don't go up? The reality is, it's not our responsibility. These local county commissions should be more responsible and say even though property values are going up our needs and our demands have not. So why do we need to continue to grow our government? We do not want property taxes to go up.
Moskowitz: I served on a city commission for six years. I served on it in a city that had new construction going on and had new revenue. At that time that we lowered taxes several times. I never voted for a tax increase. I wouldn't support a property tax increase in Tallahassee.
What about the Best and Brightest bonus program for teachers?
Trujillo: Absolutely, I support it. You want people who have competency in math and language arts teaching in those areas. I think a great way to attract young competent teachers who are highly distinguished is by [providing them] with bonuses.
Moskowitz: I think everyone realizes Florida teachers are dramatically underpaid. The problem is that we don't have the money to give an all-out raise. So coming up with programs and different ways in which we can give teachers additional dollars, I'm for it. There are some issues I have with the details of the current program. Complaints from teachers [about linking their own ACT scores to a bonus] are valid.