Experts don't expect much new money to ease state's $2 billion shortfall

Published: Thursday, January 12, 2012 at 7:05 p.m.
Last Modified: Thursday, January 12, 2012 at 7:05 p.m.

TALLAHASSEE — State economists gave Florida lawmakers a dose of bad news Thursday when they reported that the slowly recovering economy will not boost revenue enough to overcome a $2 billion budget shortfall.

As lawmakers begin to write a new budget for the 2012-13 fiscal year, the state Revenue Estimating Conference revised its financial forecast, but the net result showed only a $26 million adjustment in the roughly $25 billion general revenue fund.

“I wouldn’t expect that it is going to help the Legislature in terms of having a lot of new money to ease the situation,” said Amy Baker, head of the Legislature’s Office of Economic and Demographic Research.

On the positive side, the economists don’t see another economic dip in the coming year. But they said their original projection for tepid growth in the state’s main revenue sources, including the sales tax, remains on target.

“It’s unfolding as we expected it to. That’s the good news,” Baker said. “We wish it was faster. That’s the bad news.”

Based on a slight uptick in tax collections, the economists added $46 million to their forecast for the current budget year. They cut $19.9 million for the next year, which begins July 1, for a net adjustment of $26 million.

The official forecast said the chances for a second recession had “diminished” since last year, but Florida’s economy “still has far to go to return to normal conditions.” And potential turmoil in the European markets could threaten the forecast.

The largely unchanged forecast — from an earlier projection last fall — leaves lawmakers and Gov. Rick Scott in the same position as they try to craft a $66 billion budget: the state’s needs for schools, health care, roads and other services will outstrip revenues.

Since neither Scott nor Republican lawmakers who control the Legislature want to raise taxes or fees, they will have to cut the budget to make up the shortfall, including creating a $1 billion reserve fund.

Scott, who said wants to boost school funding by $1 billion, has suggested cutting more than $2 billion in Medicaid, with most of it coming from reductions in payments to hospitals for the care of the poor and disabled.

The new forecast also left unresolved the apparent rift between the House and Senate on when to act on the budget.

Although lawmakers are meeting two months earlier this year because they must also draw new legislative and congressional districts, House leaders want to complete the budget by early March, the scheduled end for the 60-day session. Normally, lawmakers pass the annual budget in late April or early May.

House Appropriations Chairman Denise Grimsley, R-Sebring, said the new forecast reinforces that strategy since the minor revenue adjustment — amounting to .05 percent of the general revenue fund — means “that everything is in place at this time for our budget to move forward.”

Grimsley also said resolving the $2 billion budget shortfall “is not insurmountable.”

“We will once again face many difficult choices as we craft a budget that reflects the House priorities,” she said. “Delaying these tough choices will not make them go away.”

House Speaker Dean Cannon, R-Winter Park, agreed.

“There are inherent risks and uncertainty with any forecast, but none that can’t be overcome with conservative budgeting, planning for contingencies and setting aside ample reserves,” Cannon said.

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