or how the sub-prime mortgage fiasco can wreck a state. Of course as a state leader you have to cast a blind eye and deaf ear to the folks warning this could happen.
Nothing like seeing yet another state plan for the future based on over optomistic revenue projections and then cut education, health care and social programs to make up the difference.
“we never saw this coming”
Yeah, right.
Band-Aid budgeting
Proposed cuts reveal system’s sickness
Narrowly speaking, Gov. Charlie Crist last week took aggressive action to limit Florida’s economic crisis, recommending a host of savings while holding K-12 education harmless.Broadly speaking, Mr. Crist acted within the constraints of an increasingly outdated tax and revenue system: He applied Band-Aids on wounds that result from systemic disease, which is best managed through major surgery. That is, far-reaching reform.
Some of the governor’s proposals, within the context of the existing system, are sensible however, and even forward-looking.
His strategy of spending to stimulate the state’s economy in the face of a $1.1 billion shortfall has merit – although widely respected economist David Denslow of the University of Florida told a New York Times Regional Newspaper Group reporter that Mr. Crist’s plan, while a move in the right direction, was more symbolic than significant.
Still, symbolic gestures can be meaningful. In the face of a slumping Florida real-estate market and a record increase in foreclosure filings, the strategy is a strong indication that Mr. Crist will be willing to use public dollars to revive private markets. In the wake of a national report last week suggesting that mortgage foreclosures may continue to rise, that may be especially important.
But other recommendations – particularly raiding trust funds and cutting $272 million from higher education – are alarming. Budget policymakers, fortunately, have less freedom to use trust funds than they had before Florida voters last year approved a constitutional amendment limiting to 3 percent of state revenue the use of nonrecurring money for recurring costs.
The state does have millions in reserves, rainy day funds that, as the governor said, could cover part of the gap and are really suitable for helping to refire the economy at times like this.
Equally disconcerting, however, are the governor’s proposed higher-ed cuts, particularly for state universities. Mr. Crist proposes slashing funding for the universities by 6.2 percent ($188 million), versus an overall state budget reduction of 3.6 percent. The cuts to the universities would include $7 million for FSU’s Pathways to Excellence program, one of several academic enhancements systemwide. But it does include some delays, such as $10.2 million to start building medical schools at Florida International and Central Florida universities, projects that may be prudent to postpone.
Still, requiring universities to cut at almost twice the rate of other state agencies would not only harm the universities in real financial terms, but also send the message that higher ed remains Florida’s forgotten stepchild despite universities’ proven record as reliable economic engines.
University-system Chancellor Mark Rosenberg was uncharacteristically blunt in his criticism of the plan. “It seems we have a governor who wants to protect K-12, but is willing to throw higher education under the bus,” he told the St. Petersburg Times.
Unfortunately, higher education in Florida has barely hung to the side of the bus for many years. It’s politically easy, when the economy is humming, to throw universities a few extra crumbs, but they’ve been neglected for so long that they consider a budget year to be “good” when they simply don’t lose ground.
For our public universities to ever achieve national status, Mr. Crist and lawmakers must fundamentally alter their perspective and appreciate their economic value and future potential as key economic drivers.
Realistically, for that kind of investment to occur, the state’s tax and revenue structure has to be overhauled. Florida’s housing boom gave many policymakers false confidence for several years, and the harsh hurricane seasons of 2004 and 2005, ironically, provided additional boosts to the state economy as a result of reconstruction. But the boom wasn’t going to continue forever and, other than shift the financial burden of providing public services down to the local level, state policymakers have so far avoided the heavy lifting of substantive reform.
Now the bill is coming due.
Filed under: Health Care Policy, Poverty, Rural, The Southern States
