Florida’s budget woes might be over

The following article was published in The Florida Current on August 31, 2011:

Florida’s budget woes might be over

By Christine Jordan Sexton

Florida is projected to have a small budget surplus for the coming year a new forecast released on Wednesday shows.

The figures were included in a new long-range financial outlook that a panel of lawmakers will vote on next week. Florida’s Constitution requires that each year the state draw up and approve a forecast for the next three years.

But the state economists who came up with the forecast have warned that that the slowing economy could force them to revise the forecast downward. They anticipate that tax collections will drop over the next few months.

“There is a strong risk that the forecast for general revenue will be lowered,” the 99-page report states.

The report notes that the surplus is dependent on growth that is “attributable to existing Florida residents spending more, rather than the effect of increased population. For this assumption to hold, consumer confidence has to remain strong.” Recent reports have shown that consumer confidence across the nation has dropped amid stubbornly-high unemployment rates and signs that the recovery from the Great Recession may have stalled out.

Heading into next year economists have projected that the state will actually have nearly $274 million left over even after spending money on Medicaid, schools and a continued deficit in the court system. This surplus is projected even after setting aside $1 billion in reserves.

Economists noted that the deep budget cuts approved by state lawmakers this past year had greatly improved the state’s financial situation moving forward. Legislators cut thousands of state worker jobs and slashed funding to schools and hospitals as part of an effort to close a nearly $4 billion budget gap.

“For the first time since the adoption of the constitutional amendment requiring the development of long-range financial outlooks, sufficient funds exist to meet all critical and other high priority needs identified for the three years contained in the outlook,” the report states.

If the surplus were to hold it would mean that lawmakers could actually balance next year’s budget without having to enact large spending cuts.

While the new forecast assumes a certain level of increased spending for schools and Medicaid it does not include any additional tax cuts. Gov. Rick Scott has made cutting taxes a top priority as part of his effort to jumpstart the state’s economy.

The lengthy forecast does include a long list of risks that could change the state’s fiscal situation. One of those is the potential loss of Low Income Pool money – a $1 billion pot of money – that is used to help provide health care services for the uninsured and underinsured. The outlook now assumes that the money would be in place for the next three years, but that could change as a result of negotiations between the state and federal authorities over Medicaid. Federal authorities have questioned the need to keep providing the federal share once federal health care reform kicks in.

Find this article here:  http://www.thefloridacurrent.com/article.cfm?id=24398588