Federal debt deal's impact may be felt by state budget writers

The Miami HeraldAugust 12, 2011 

The federal debt debate that has divided Congress and disrupted financial markets could affect state budget writers next.

Florida’s credit rating appears safe — Standard & Poor’s gave it a boost in July — and Republican leaders in the Legislature crafted recent budgets with warnings from financial-ratings agencies ringing in their ears.

But the debt deal in Congress includes between $2.1 trillion and $2.4 trillion in cuts over the next decade, which could trickle down to Florida, where federal spending remains the state budget’s largest source of money.

Most of the federal cuts have not been identified — a so-called “super” committee is tasked with finding $1.5 trillion in savings.

But at least $917 billion in automatic cuts will start next year, which could mean less money for programs like highway construction and housing assistance. The initial cuts will not touch Medicaid spending, which accounts for almost two-thirds of the $24 billion in federal money in Florida’s current budget.

Still, some lawmakers worry that less money for Florida will further handcuff state budget writers, who have relied on federal money — plus $2 billion in new fees and cigarette taxes in 2009 — to piece together a state budget that is $4.6 billion smaller than that of 2006.

“The cuts we’ve been making have been so over the top,” said Rep. Evan Jenne of Dania Beach, a high-ranking Democrat in the Florida House. “Further cuts will only hurt more.”

But some lawmakers hope the super committee will put healthcare funding cuts on the table.

Republican leaders said they would accept less money for Medicaid, which helps with medical bills for 3 million Floridians, in exchange for a block grant for the program.

In return for Medicaid money, Florida must provide coverage for everyone who is eligible — generally children, pregnant women and the poor. A block grant would provide the state with a lump sum and let Florida lawmakers decide what health costs should be covered.

To read the complete article, visit www.miamiherald.com.

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