Paul Flemming: Trust Funds are Targets Again

December 8, 2011 | Tallahassee Democrat

The broom’s smaller, but the sweeping goes on.

Since 2008, the state has relied on $2.8 billion swept out of dedicated trust funds — money set aside by legislative act and theoretically reserved for specific purposes — to allow the state to balance its budget in lean times.

Lean times are still with us, and so, too, are trust-fund sweeps.

Gov. Rick Scott’s proposed spending plan, unveiled Wednesday, includes $147.4 million swept out of nine trust funds. It’s all there in the bowels of the Republican governor’s proposal — Section 55 on page 326 of the 342-page document — that is the starting point for the Legislature.

That’s considerably less than the $523.9 million in sweeps Scott and the Legislature used earlier this year to balance the 2011-12 budget. It’s also well below the more than $588 million swept from trust funds to balance the books in 2008-09 as well as 2009-10.

The relatively modest sweep Scott proposes also represents the political maturation of a maverick governor, swept into office on an iconoclastic platform of radical change. It’s a small clue, among many, that Scott now picks his battles and is no longer waging total war at all times. A mere 10 months earlier, at the dawn of his governorship, Scott proposed eliminating every single discretionary trust fund in the state’s coffers.

The biggest hit in the current proposal is taken from the same trust fund that’s been sapped the most in the last four years, the Local Government Housing Trust Fund.

Scott’s proposed budget included taking $70.7 million from it in next year’s spending plan. If that happens, the Local Government Housing Trust Fund will have been drained of $642.4 million since 2008.

That’s just one of 171 trust funds in the state, created either in the constitution or in state law. Some exist just to park federal money before it’s drawn down for programs or to pay off debt.

In 1992, lawmakers created the Local Government Housing Trust Fund. Doc-stamp taxes, collected on real-estate transactions, fill up the trust fund. By law, it’s supposed to be spent exclusively on housing programs. Florida statutes say the money is intended to provide decent, affordable housing to every Floridian by 2010.

We can only assume that’s been done.

Or at least that’s the theory used by Scott and lawmakers — the vast inventory of available, cheap (compared with 2005) homes throughout the state means affordable housing is no longer an issue.

The Sadowski Housing Coalition disagrees. And some lawmakers earlier this year raised the important point that real-estate industry interests agreed to the doc-stamp tax nearly a decade ago explicitly and exclusively because of how it would be used. It’s not being used that way now.

Not included in Scott’s proposal is any sweep from the state’s transportation trust fund. That should placate road builders, who loudly protested the move last year.

But there are sweeps from numerous regulatory trust funds in Scott’s proposal, including $33 million from the insurance regulatory trust fund, $10 million from the financial institutions regulatory trust fund and $10.5 million from the Department of Business and Professional Regulation’s professional regulation trust fund.

Without the nearly $3 billion in trust-fund sweeps over the last four years, we’d all presumably be paying higher cigarette taxes, higher fees to file lawsuits and higher entrance fees to state parks — another major strategy pursued by lawmakers to get us over the recessionary hump.

Trust-fund sweeps have been pitched as a necessary evil, staving off more severe cuts to other state services. But it’s still fundamentally dishonest.

Scott earlier this year, with his administration’s first budget proposal, sought to sweep 124 trust funds into general revenue — $8.5 billion — and favored eliminating all trust funds not required by the constitution.

He may yet do so, but that’s a battle he’s decided to save for another fiscal year.