Economic Stimulus Update: Unemployment Benefits…FL

by Keith Knight

by Keith Knight

The states are between a rock and a hard place on the stimulus, to take or not to take, that is the question…

LYRICS, ROLLING STONES:

The fields of Eden Are full of trash
But if we beg and we borrow and steal
We’ll never get it back

People are hungry They crowd around
And the city gets bigger as the country comes begging to town
We’re stuck between a rock And a hard place
Between a rock and a hard place

Update from FL, where the GOP Governor and State Legislature are having the same battles over the Federal Stimulus as we are in AZ….

St Petersburg Times:

Crist portrays the federal aid as a panacea that would allow the state to avoid deep budget cuts, afford some property-tax cuts and increase spending.

“It’s a whole new world,” Crist said. “We’re in an economic crisis. We need this money to get us to a bridge to a better future. And I believe that by the time those three years pass we will be on the rebound.”

But three years of record job losses, plummeting tax collections and a flat-lined housing market mean legislators don’t all share Crist’s optimism. “The governor has a very positive outlook and I mean that with all due respect,” said Republican Senate President Jeff Atwater. “We don’t have a crystal ball. We don’t know how deep this (bad economy) is going to go. We don’t know how long this is going to last.”

That is the question. What happens if the economy doesn not recover and all these long term changes to state laws are enacted? The states would be in thrall to Federal handouts..

Legislators fret that Crist’s $66.5 billion budget proposal for next year is based on rosy financial assumptions that will likely be disproved when state economists meet March 13 to estimate state revenues. Also of concern in Crist’s budget: Of the government expenses that occur annually, 12 percent would be paid for through one-time money sources, such as the stimulus package.

What does it take to get it passed?

The state Constitution requires a supermajority vote of the Legislature if more than 3 percent of recurring expenses are funded from one-time money sources.

Legislators worry about expanding government programs — especially Medicaid — with money that would disappear in three years, leaving the state with large entitlement programs and less money.

“It’s like someone gave you a Mercedes and said they made a few down payments. Now the rest is up to you,” said Punta Gorda Republican Rep. Paige Kreegel.

Atwater and acting House Speaker Larry Cretul say they’re also unsure what strings might be attached to the hastily passed stimulus package.

The package seeks to ensure that legislators don’t cut programs that already receive federal money. So to get the bulk of the cash, Florida has to maintain relatively high levels of spending for health care, schools and transportation.

Even if the Legislature starts using the federal money July 1, legislative analysts say the state could still have a $2 billion hole in the general revenue portion of the budget. Lawmakers won’t have an easy time filling that gap by making more cuts. Nearly 78 percent of the general revenue budget goes for schools and health care — and lawmakers probably can’t cut that if they take the stimulus money. The next largest section of the budget — criminal justice — is also tough to slash as the crime rate increases and the inmate population swells to 100,000.

If those three areas aren’t touched, lawmakers could be left with a pool of $1.1 billion — and $2 billion in cuts needed. The state has virtually no savings left and analysts estimate that there’s little left in special accounts called trust funds.

What will they do if FL does NOT take the money? They propose property tax increases?! Are they frakkin crazy??

Moderates in the Senate say they have little choice but to take the stimulus cash. They face an estimated deficit of about $5.5 billion. Without stimulus money flowing to education, they might have to raise the statewide school property tax rate because property values are bottoming out. If they take the money, property taxpayers could avoid a rate hike for an estimated savings of $356 million to $1 billion statewide.

Senators and some House Republicans also say this is the session to eliminate some sales tax exemptions, approve Crist’s gaming agreement with the Seminole Tribe of Florida to raise $288 million and consider upping the cigarette tax, the third lowest in the nation.

Hard-core conservatives, mostly in the House, are reflexively against tax increases and the gaming agreement. And they’re making noise that they might reject the federal money.

Republican Sen. Evelyn Lynn of Ormond Beach says taking the stimulus money has practical and political pitfalls. But, judging from the stream of constituents asking for help, she concluded that not taking it could be worse.

“When you get people who don’t have a place to live, don’t have food and have major problems, you begin to see things that maybe others don’t see,” she said. “It is a risky plan and there may be consequences down the road, but you just can’t turn the money away.”

March 2, 2009. Tags: , , , , , , . Economy, Finance, Foreclosures, Housing, Labor Department, Music, Obama Administration, Politics, Popular Culture, Uncategorized, Unemployment Statistics, Wall St.

One Comment

  1. » Economic Stimulus Update: Unemployment Benefits…FL replied:

    […] xpigs wrote an interesting post today onHere’s a quick excerptThe states are between a rock and a hard place on the stimulus, to take or not to take, that is the […]

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