Newspaper article Sarasota Herald Tribune

Pension Ruling Could Upend Budget Process

Newspaper article Sarasota Herald Tribune

Pension Ruling Could Upend Budget Process

Article excerpt

TALLAHASSEE

As the Senate and House move toward completing a $70 billion- plus state budget, a pending court ruling threatens to derail the Legislature's annual appropriations process.

The highly anticipated decision from a circuit court judge in Leon County could overturn a 2011 law that made public employees pay 3 percent of their salaries for their pensions, leaving an $860 million gap in the current budget year and vastly complicating the proposed spending plan for the coming year.

If Circuit Judge Jackie Fulford overturns the law, it will also bring a huge financial challenge to Florida's counties, which could lose close to $600 million in the current year.

"I think it would place the budget in serious jeopardy if we have to go back because of a judge's order to cut another $1.2 billion out of the budget," said Sen. Don Gaetz, R-Niceville. "I think it would create some real severe problems for critical services for the people of Florida or it would necessitate a tax increase, which I think a vast majority of the Senate Democrats and Republicans would be opposed to."

Senate Budget Chairman J.D. Alexander, R-Lake Wales, who will present the Senate's $71 billion budget bill on the chamber's floor today, said it was premature to be concerned about the ruling.

"Until we know how she rules, it would just be speculation," he said.

The Florida Retirement System collects retirement money for more than 655,000 active employees throughout the state, and provides benefits to 219,000 retirees.

An analysis by the House last fall showed that an adverse court ruling could wipe out $860 million in savings that lawmakers built into the current budget, including $456 million from the 3 percent employee contribution and $404 million from limiting cost-of-living adjustments for future retirees.

That figure was confirmed in an annual financial report that Chief Financial Officer Jeff Atwater presented to Gov. Rick Scott and legislative leaders last month.

"The financial impact of a ruling that the compulsory 3 percent contribution is unconstitutional would be in excess of $861 million," the report said.

An adverse ruling would present a double whammy for lawmakers. They would have to plug the hole in the current budget year, which is nearly three-quarters complete, while having less money for the new budget year, which begins in July.

It could jeopardize their ability to provide an additional $1 billion for public schools, which Scott has proposed. It could also deepen cuts for many state programs, including hospitals and state universities, which are already facing major revenue losses.

At the least, a negative ruling may cast into doubt the 2012 Legislature's ability to finish by its March 9 deadline.

But there are plenty of variables in the case -- not the least of which is how Fulford will rule. …

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