If Florida lawmakers don’t agree to borrow money to pay for school construction and maintenance projects, they will come up about $36 million short of what state education officials have requested for a key program next year.
State economists made their final estimate last week on money available in the 2017-18 fiscal year for the Public Education Capital Outlay, or PECO, program, which is funded by the gross-receipts tax on utility services, including electricity and communications. They looked at two scenarios: one without bonding and the other with bonds.
With no bonds, the economists estimated PECO would generate $337 million in cash that could be used for projects in the kindergarten-through-12th grade system, state colleges and universities. That funding could be supplemented with other revenue. But if it is not, it will fall short of the $373 million PECO request from state education officials.
Bonding would change all of that. The economists project Florida has the capacity to borrow more than $2.5 billion in the next budget year, although that is a very unlikely scenario.
But in this year’s budget, lawmakers did agree to borrow $275 million, the first PECO bonds since 2011, resulting in a $625 million PECO program when supplemented with cash.
Florida has a history of major PECO bonds, reaching a peak of $1.4 billion in borrowing during the 2006-2007 budget year. That changed with the election of Gov. Rick Scott in 2010, as Scott aggressively looked to limit state borrowing, resulting in a major drop in state debt. That drop was aided by historically low interest rates that allowed the state to refinance much of its debt at a lower cost.
But as lawmakers begin crafting a new state budget in the coming weeks, House Speaker Richard Corcoran, R-Land O’ Lakes, has voiced opposition to new PECO bonding, while Senate President Joe Negron, R-Stuart, said he is open to a “reasonable” amount of bonding.
With Scott’s record of limited borrowing, a major PECO bonding plan is unlikely and a more modest plan remains in doubt.
The debate over bonding has to be put in the context of the $373 million PECO request, which education advocates say is a conservative number that does not reflect the true construction and maintenance needs for public schools, state colleges and universities.
For instance, the official PECO request for state universities is $124 million, but does not include a $284 million list of “supplemental” construction and maintenance projects also approved by the state Board of Governors, which oversees the university system.
The 12 universities last September identified more than $500 million in construction needs for the 2017-18 budget year, which was the list used by the Board of Governors to develop its more modest request.
Similar needs have been identified by the 28 state colleges, with the official PECO request reflecting $55 million in construction projects out of a three-year list of $167 million. The three-year list doesn’t include more than $600 million in other construction and maintenance needs identified by the colleges.
The need for school construction in some of Florida’s smallest, rural counties will go unmet if lawmakers only fund the official PECO list.
As part of a program where the state provides funding in small counties that lack major tax bases, the PECO request includes $16 million to finish public school projects in Hamilton and Taylor counties. It does not include another $131 million in identified K-12 projects in Liberty, Jackson, Gilchrist and Bradford counties.
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