No budget gimmicks, one-time revenues, borrowed funds, temporary funds or tax increases
"Balance the budget — without gimmicks, one-time revenues, borrowed funds, temporary funds, or tax increases."
Subjects: State Budget
Scott raided trust funds to help balance budget
Updated: Thursday, January 5th, 2012 | By Amy Sherman
As a businessman outsider, Rick Scott promised to ditch the old tricks politicians used when it came to passing the state budget. Part of that pledge was to balance the budget "without gimmicks, one-time revenues, borrowed funds, temporary funds, or tax increases."
One year in, how did Scott do?
We asked the state's chief economist, Amy Baker, if the 2011-12 budget included one-time revenues, borrowed funds, temporary funds or tax increases.
Baker pointed us to the state's long rang financial outlook from Sept. 7, 2011. The planning document, which provided a broad overview of the economic conditions in the state, also described how the state filled its budget gap for the 2011-12 year, Scott's first as governor.
That document showed that Scott and lawmakers relied on $388.5 million in transfers from trust funds. (Page 17 of the report.) The same figure is also noted in the state's Post-Session Outlook Statement for General Revenue.
Scott's budget proposal for 2012-13 includes an additional $147.4 million in trust fund transfers, Baker said.
Why does that matter?
Trust funds are "earmarked for a specific purpose, either by general law,the Constitution, or a trust agreement," according to Florida's tax handbook.
For example, the state's "education enhancement trust fund" goes to education and the "tobacco settlement trust fund" goes toward human services. As the Orlando Sentinel noted, trust funds "are intended to provide a consistent and predictable source of money for narrowly defined purposes. Unlike the general fund, which gets its money from taxes, trust funds are typically financed with fees more directly related to their purpose. Professions and industries pay license fees into trust funds that cover the cost of regulating them. A trust fund that supports the state court system gets its money from court fees, fines and other legal charges."
That changes, however, when lawmakers transfer or "sweep" trust fund money into the state's general revenue fund. Once the money moves to the general revenue fund, it can be used for any purpose. (In 2011-12, Scott signed a budget that used $150 million from the state transportation trust fund to help pay for education. For 2012-13, Scott has proposed sweeping local housing trust funds and an insurance regulatory trust fund, among other funds.)
Each transfer is a "one-time" revenue source, Baker said.
"To be recurring, the Legislature would have to require the shift to occur on a permanent or semi-permanent basis," Baker said in an e-mail. "For example, the law could be amended to require a specified amount of money to transfer automatically every year by a certain date. Alternatively, a trust fund sweep is only scheduled to occur one-time --- usually by the General Appropriations Act, which itself is only scheduled to last for the upcoming budget year."
There is an additional question about Scott's promise to now rely on "borrowed funds." The state is borrowing funds for transportation projects through bond issues, but Scott spokesman Lane Wright said that's out of bounds for the purposes of this promise. "It would be inaccurate to say he used borrowed money to balance the budget. As you know, budget gaps and balanced budgets are always discussed in terms of the general revenue budget. That is the context of Gov. Scott's original statement. Transportation-related bonding is a part of the (Department of Transportation) five-year infrastructure plan, is based on a specific trust fund, and does not impact general revenue."
To us, the transportation bonding is a minor point when considering this promise. What isn't minor, however, is the state's use of trust funds to help balance the budget. Scott promised no "gimmicks" or "one-time revenues" to balance the budget. Trust funds are intentionally kept outside of general revenue for a specific purpose, and when Scott transfers or sweeps money from trust funds to fill a hole in general revenue, he uses a one-time fund not otherwise available.
We rate this Promise Broken.
Florida's Office of Economic and Demographic Research, "Florida long-range financial outlook," Sept. 7, 2011
Florida's Office of Economic and Demographic Research, "General Revenue fund financial outlook statement," June 29, 2011
The Florida Legislature, Fiscal analysis in brief, 2011 session
Gov. Rick Scott, Truth in Bonding, Fiscal year 2012-13
Miami Herald, "Rick Scott bashes Obama's stimulus but allows $370m to stay in the budget," May 31, 2011
Miami Herald, "Update video: Rick Scott's stimulus flip flop," May 31, 2011
Orlando Sentinel, "Keep trust in funds. Legislators should reject Gov. Scott's proposal to divert dollars to other purposes," March 3, 2011
Interview, Amy Baker, state of Florida's chief economist, Dec. 7-27, 2011
Interview, Amy Graham, spokeswoman for Florida Gov. Rick Scott, Dec. 9, 2011
Interview, Lane Wright, spokesman for Florida Gov. Rick Scott, Dec. 12, 2011