FLORIDA'S BUDGET GAP SURGES TO $2.3-BILLION

["......the state can't afford to skimp on drug treatment."]

TALLAHASSEE - As the economy tanks, Florida legislators learned
Wednesday that the state's budget deficit has ballooned to
$2.3-billion, a $150-million increase in just a matter of weeks due
mostly to soaring health care costs. The grim financial picture was
laid out in detail during a rare pre-session meeting of the full
Senate called by Senate President Jeff Atwater, who told the lawmakers
that the state is running out of time and money.

Atwater told legislators that they would have to come back next week
and prepare for a special lawmaking session soon to figure out ways to
balance the budget by cutting spending and raiding savings accounts.
He said fee and tax increases will likely be discussed fully in the
regular spring legislative session.

Without prompt action, Atwater warned, Florida's bond rating could be
downgraded, raising the cost of managing the state's debt by up to
$150-million more a year.

"This is not simply another budget exercise," said Atwater, a North
Palm Beach Republican. "Throughout the nation, and particularly this
state, there has been a tectonic shift in the structural underpinnings
of our economy."

Unmentioned in the presentation: State economists' findings last week
that statewide property values are forecast to plummet by a total of
$266-billion, an 11 percent decrease, next year. Virtually all
tax collections are falling, from sales to corporate income taxes.

If property tax rates hold the same next year, that could cost schools
a total of $780-million statewide. The potential hit to Hillsborough
and Pinellas counties: $23-million and $31-million, respectively. The
potential hit to Hernando and Pasco counties: $1.6-million and
$6.3-million, respectively.

The deepening deficit all but ensures some type of fee or tax increase
soon, and it complicates efforts to provide the basics of government.
Up to 147,000 state workers could face two-week furloughs for a
savings of up to $300-million. Parts of prison yards are already being
converted into tent cities. And advocates are bracing for big cuts to
Medicaid, the costly program for poor children, the elderly and the
catastrophically sick.

Medicaid rolls are skyrocketing by 100,000 new recipients as the
economy worsens, costing the state $146-million more than anticipated
this budget year, which ends June 30.

The higher Medicaid costs, reported for the first time Wednesday, are
to blame for the widening deficit.

Next budget year, legislators could have to spend $346-million more
than anticipated for Medicaid alone.

At the same time, crime is rising and so is the prison population, by
about 6 percent yearly.

Florida's top prison official, Walt McNeil, called the decrease in
money and increase in crime "disturbing." He said the re-offender rate
of ex-inmates is 32 percent, meaning one of every three inmates
returns to a Florida prison within three years of release. The
population of the Florida prison system will soon cross the 100,000
threshold for the first time.

It stood at 99,584 on Wednesday, precariously close to over-capacity.
That could require early release of inmates, something Gov. Charlie
Crist pledged to avoid.

So Florida is pitching tents at a dozen low-security prison work camps ,
most of them in rural North Florida, to house an excess of
prisoners. They're also erecting four modular prison wings in
northwest Florida.

"We're in the process of putting tents together across our state,"
McNeil told a Senate committee this week.

It costs about $100-million to build a typical 1,300-bed
prison.

Senate analysis shows that even though the inmate population has
exploded this decade, and two-thirds of inmates need substance abuse
treatment, the number of inmates getting such help has declined, from
10,547 in 2001 to 8,865 by 2006.

McNeil is asking for more money for substance abuse treatment in next
year's budget, but he concedes it's a tough sell in such a difficult
budget year.

Sen. Victor Crist, the Tampa Republican who oversees the budget's
criminal justice section, said Wednesday that the state can't afford
to skimp on drug treatment. Crist is proposing early release for some
nonviolent offenders into halfway houses or incarcerating some inmates
on converted Navy ships.

The state can save only so much by cutting the criminal justice
budget. It accounts for just 7 percent of the total state budget of
about $66.3-billion. The biggest section of the budget: health care,
at 35 percent.

The Republican head of the Senate's health budget committee, Durell
Peaden of Crestview, said he expected his budget will be "slashed."

"It's going to be horrible," Peaden said.

Peaden stopped short of endorsing a plan to raise taxes on cigarettes
by as much as $1 a pack. The vice chair of his committee, Democratic
Sen. Nan Rich of Sunrise, said legislators should consider revenue
increases such as the tobacco tax. But budget chairman J.D. Alexander
said the Legislature needs to demonstrate that it's wisely spending
money before it asks for more.

To make ends meet, Crist is considering more budget cuts, more
borrowing, increased fees and merging some agencies, such as combining
the Department of Health and the Medicaid program, run by the Agency
for Health Care Administration.

"Everybody knows we can be more efficient," Crist said.

By Marc Caputo and Steve Bousquet, Times/Herald Tallahassee Bureau