State Politics

Florida’s 2011-12 budget outlook getting gloomier

TALLAHASSEE -- A legislative economist told the Senate Budget Committee on Tuesday that she expects a predicted $2.5 billion budget gap to widen because the state’s economic recovery has been slower than forecast.

The panel’s chairman, meanwhile, hinted that Gov.-elect Rick Scott’s campaign promises for deep spending and tax cuts may run into trouble in the Legislature.

State economists in September estimated the $2.5 billion difference between anticipated revenues and expenses ranging from high priority to critical for the 2011-12 budget year that begins July 1.

Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research, told the committee that all the numbers haven’t yet been crunched, but it looks like general revenue will be lower and costs higher than in the prior forecast.

“It sounds like it’s all bad, but the truth of the matter is we are starting to show improvement” in the economy, Baker said. “It’s just not as strong as we’d hoped it would be at this point.”

Committee Chairman JD Alexander, R-Lake Wales, said it’s too early to tell whether lawmakers will be able to cut spending by $4 billion or reduce property and corporate income taxes as Scott, also a Republican, proposed during his campaign.

“Now we are in the governing mode,” Alexander said. “I would hope that all of us take a deep breath and move away from campaign rhetoric and start focusing on how do we make the best decisions possible to move our state forward.”

Baker’s bad news includes up to $400 million more in state Medicaid expenses and $150 million less in school property tax collections due to a 1.2 percent drop in real estate values than previously predicted for 2011-12.

The state now also expects to collect $30 million less from utility gross receipt taxes earmarked for education construction and maintenance projects. Gasoline and other transportation taxes also are expected to drop, which would cut funding for road building and maintenance.

Economists will meet Dec. 14 to update their forecast of general revenue, mainly sales tax, but collections are running $136 million below estimate for the current budget year. Baker said it looks like they’ll be off another $100 million for November when those collections are calculated in a couple weeks.

The current general revenue estimate for the next budget year is $24.7 billion, which would be a 7.4 percent increase, but that that number probably will drop in the update that Scott will use to make his budget recommendations to the Legislature early next year.

Other drags on the budgetary outlook include flat lottery receipts and a drop in slot machine gambling. Motor vehicle fee collections also are projected to drop.

Alexander said his main focus will on reducing Medicaid expenses, also a key plank of Scott’s platform. More than half of those funds come from the federal government, but the state’s portion still eats up nearly half of Florida’s 6 percent sales tax, Alexander said.

Scott also has proposed cutting state contributions to its pension fund by making employees, who haven’t had an across-the-board raise in five years, pay into the plan. Alexander, though, said that’s not the first place he’d look for savings.

“I may have to go there, but I’m trying to do it by controlling costs in other programs,” Alexander said.