ATLANTA -- A showdown seemed in the making yesterday as Florida lawmakers in both chambers neared agreement on a no-new-taxes budget that Gov. Lawton Chiles has promised to veto.

A state Senate-House conference committee yesterday was expected to resolve their differences on the $30.65 billion budget for fiscal 1993. The full Legislature, which is in special session, was expected to vote on the measure today.

Despite the agreement, Florida is not likely to have a budget anytime soon. Gov. Chiles is insisting that in the 1993 fiscal year, which begins July 1, $1.35 billion in new taxes is needed to supplement spending. The governor has said that the tax increases are needed to avoid drastic spending reductions that would cut funding for universities by 7% and public schools by 2%, and slash health care for 100,000 Floridians.

Kathy Putnam, the governor's deputy press secretary, said yesterday that Gov. Chiles insists that his "Fair Share" budget plan, which would broaden the state's sales tax as part of an adjustment of Florida's tax structure, be passed in its entirety.

"The governor has said that if the budget fails to include the Fair Share proposal, he will veto it," she said. "He is not entertaining a compromise."

The Legislature, meanwhile, has resisted raising taxes in an election year.

Mr. Chiles's tough stance follows recent unsuccessful attempts to stake out a middle ground on tax increases. Last week, House Democrats had discussed the possibility of a $489 million tax increase compromise, according to a legislative aide. The governor rejected the proposal, the aide said, insisting on the full $1.35 billion.

The governor's promised veto follows his rejection in March of a budget that failed to raise taxes approved during the state's regular legislative session.

"I intend to do what's right, and I intend to keep doing it," Gov. Chiles said Friday.

Under Florida's constitution, if the state does not have a budget in place by the beginning of the new fiscal year, it cannot spend money and would have to shut down operations.

Officials at Moody's Investors Service and Standard & Poor's Corp. said they were closely monitoring the apparent standoff between Gov. Chiles and the Legislature.

"Florida's budget situation worries us," said George Leung, managing director of state ratings at Moody's. He said the Legislature is walking a fiscal tightrope as it fights higher taxes while population growth swells demands for services.

Moody's rates Florida's general obligation debt Aa. Standard & Poor's Corp. rates that debt AA.

"At this point we are waiting to see what happens," said Jon Reichert, a director at Standard & Poor's. "If things remain in limbo after the beginning of the new fiscal year, that's a problem. Otherwise we're not getting overly concerned."

The governor last month unveiled details of his Fair Share plan, which would broaden the state tax base in exchange for a reduction in sales and property tax rates. The net $1.35 billion increase in levies would allow Mr. Chiles to continue funding health and education services at present levels.

The plan would generate $2.79 billion by dropping sales tax exemptions on 99 goods and services, and raising corporate taxes and levies on financial assets.

This would be offset by $1.44 billion in tax relief, including a one-penny rollback of the state sales tax to 5 cents, and a 50% reduction in property taxes on real estate valued under $150,000.

The Fair Share plan was proposed two months after Gov. Chiles vetoed a no-new-taxes budget approved during Florida's regular legislative session, which ended in March. During that session, the governor had proposed a limited broadening of the state's tax base.

Although lawmakers are insisting their package would not result in new taxes, they have quietly agreed to increase fees charged on real estate transactions. The proposed increase would raise the current 60 cent per $100 fee to 70 cent per $100, generating about $48 million a year in new revenues.

One use of the new revenues would be to shore up the state's housing trust funds, permitting increased issuance of housing bonds. Other programs that would benefit from the fee increase are emergency home repair and home ownership assistance initiatives.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.