Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.
+1 212 318 2000
Europe, Middle East, & Africa
+44 20 7330 7500
+65 6212 1000
Special education teacher Hal Krantz hasn't had a raise in two years, but he'll be among 650,000 public employees whose pay checks will be cut to help balance an annual state budget that also slashes spending by nearly $4 billion.
The $69.7 billion budget was set for final votes in the House and Senate late Friday to close out Florida's annual legislative session. Passage was virtually assured. Both chambers have overwhelming Republican majorities, and GOP leaders kept their pledge not to raise taxes although they found other ways to balance the budget that would go into effect July 1.
It will save more than $1 billion for the state and local governments by requiring public employees such as Krantz to contribute 3 percent of their pay to the Florida Retirement System, now fully funded by taxpayers.
"Every expense I have has been going up, except my salary, so it's going to be a hardship for me and every other teacher out there," said Krantz, who teaches at Coral Springs Middle School in Broward County. "You're going to have a lot of teachers that are going to be looking for second jobs."
That's assuming they still have their first jobs.
The budget eliminates nearly 4,500 state positions although about 2,000 are vacant while 1,700 jobs are in prisons slated to be privatized. School districts also are anticipating layoffs and furloughs due to state spending cuts.
Some private sector employees who depend on state funding, such as road builders and nursing home workers, also may get the ax.
There's also fiscal pain ahead for college and university students who will be paying higher tuition, and many will see their state-funded scholarships cut.
Public school classrooms will become more crowded.
Hospitals and nursing homes will take a reduction in Medicaid payments.
Everglades restoration spending will be cut and funding eliminated for the Florida Forever environmental land buying program.
"Although this has to be one of the most difficult budgets in the history of Florida, I think it's one that most of can go home and feel like it's a workable budget," said Senate Budget Chairman JD Alexander, R-Lake Wales.
Yet, lawmakers found enough money to cut taxes by $308 million -- mostly at the expense of water management districts -- and pay for dozens of their pet projects. Those include college and university buildings, a rowing facility in Sarasota and a $400,000 study of House Speaker Dean Cannon's proposal to expand the Florida Supreme Court. The budget also maintains $2.28 billion in reserve funds.
Requiring teachers, state workers and many local government employees, including police and firefighters, to make retirement contributions was one of Gov. Rick Scott's top priorities although he had proposed bigger contributions of 5 percent Scott said it's only fair for public employees to contribute because most workers in other states and the private sector must do so.
Public employee unions opposed that move. They say employees gave up pay raises decades ago in exchange for full public funding of the plan. Also, state workers now are going into a fifth straight year without an across-the-board pay raise. Democratic lawmakers derided the contribution requirement as an "income tax."
School employees make up the biggest segment of the retirement system.
"Either way you look at it it's a pay cut," said Jennifer Smith, a French teacher at Hialeah High School near Miami. "It doesn't sound like a lot, but that's the little bit that lets me go out to eat sometimes. That's going to impact not only us and our quality of life but the economy."
Rep. Ritch Workman, R-Melbourne, said the state needed the employees' money to help avert a potential $3.75 billion shortfall.
"We can't look each other in the face and say it's OK to cut education and health care funding while fully funding pensions that we simply can't afford" Workman said.
The pension contributions will help make up for a $2 billion cut for schools, driving down spending by $542.03, or 8 percent, to $6,267.97 for each student. The pension contributions along with local option tax increases and federal jobs money that most districts are carrying over from the current year, though, are expected to drop the net reduction to about 1 percent.
School districts also will save some money from legislation loosening the state's class size limits.
Tuition is going up 8 percent at state and community colleges as well as public universities. Most if not all universities are expected to seek Board of Governors approval for another 7 percent increase to the legal limit of 15 percent. Lawmakers also are cutting the popular Bright Futures scholarships by 20 percent.
"It seems like tuition has gone up a little every year," said University of Central Florida junior Alex O'Donnell of Ormond Beach. "Bright Futures going down is what hurts the most for me."
O'Donnell said he's working part time and getting help from his parents "but it's a lot to make up."
The budget will cut Medicaid reimbursement rates by 12 percent for hospitals except rural and children's hospitals, which will be cut 3 percent. That's after hospitals were cut 7 percent by the current year's budget and 1.6 percent cut in 2009-10.
Hospital officials say those reductions will mean higher prices for private patients and their insurers.
Nursing homes will get a 6.5 percent cut but can offset some of that through a budget provision that also reduces minimum direct care for each patient from 3.9 to 3.6 hours daily.
The budget also "sweeps" $528 million from trust funds dedicated to specific uses to general state spending. That includes $150 million from the Transportation Trust Fund, supported by fuel taxes, which will cost 7,000 construction jobs, said Bob Burleson, president of the Florida Transportation Builders Association. He's urging Scott, who campaigned on a job creation platform to veto this "trust fund raid."
Scott had threatened to veto the entire budget if lawmakers failed to cut Florida's corporate income tax. Legislative leaders insisted the state couldn't afford the $458 million cut Scott wanted. He eventually agreed to accept only a $30 million cut. Scott called it a first step toward phasing out the corporate tax as part of his drive to create jobs by making Florida friendlier to business.
"The best thing government can do to create jobs, as the governor has said, is stay out of the way," said Alexander, the Senate budget chief. "I don't believe government creates jobs. I think we kill jobs, and this budget I think goes a long way towards creating a bit better environment to grow jobs in our state and help folks get back to work."
Associated Press Writers Christine Armario in Miami and Kyle Hightower in Orlando contributed to this report.