It’s that bad: Florida will fall another $2.4 billion short

House majority leader: Crist’s plan is ‘no longer a viable option.’

By Brandon Larrabee
The Florida Times-Union--March 14, 2009

TALLAHASSEE – Economic forecasters sliced $2.4 billion from the state’s expected tax income for the coming fiscal year, bringing lawmakers closer to a precise number for the budget hole they have to fill even as the new projections set off a political skirmish about how to balance the spending plan.

While not unexpected, the conclusions supported the worst fears of many lawmakers: When the revenue reduction, a dip in education property taxes and an expected increase in demand for state services are all taken into account, the total gap facing lawmakers will likely settle in right around $6.5 billion.

“[W]eakness in the state, national and world economies has deepened,” the state’s forecasting panel said in a statement.

The cut means the coming fiscal year, which begins July 1, will be the state’s fourth consecutive year of falling revenues, the first time that’s happened since the state began keeping records in the early 1970s, according to Amy Baker, head of the Office of Demographic and Economic Research.

And the larger budget shortfall means the federal stimulus package will likely fix only part of the problem. Gov. Charlie Crist has proposed aggressively using the stimulus funds and recommended the Legislature count on $4.7 billion. Lawmakers have talked of tapping only about $3.5 billion.

“It’s going to make a difference,” Sen. Steve Wise, R-Jacksonville, said of the stimulus, “but it’s not going to solve it.”

Cuts alone are also unlikely to work, said Wise, who chairs the committee overseeing public school funding.

In a statement following the announcement, House Majority Leader Adam Hasner, R-Delray Beach, let Crist have it.

“Due to a continued decline in revenues, the governor’s original budget proposal is now billions of dollars out of balance and is no longer a viable option for consideration by the Legislature,” Hasner said. “Facts and circumstances have changed, and since the governor’s proposal can no longer be considered, the Legislature has a clean slate and we will tackle this problem head-on.”

Crist called for lawmakers to use as much stimulus funding as possible and to pass a new gambling compact with the Seminole tribe.

Democrats returned to a familiar refrain used repeatedly during a budget-balancing special session in January: Lawmakers must not be afraid to look at doing away with sales-tax exemptions and considering raising taxes on items like cigarettes.

“Florida’s in very, very difficult straits at this point. And if we’re not willing to do that, then why are we here?” said House Minority Leader Franklin Sands, D-Weston.

Republicans who signed pledges forswearing tax increases “have to take a deep breath and really review that, because these are very unusual economic times,” Sands said.

In addition to solving the budget riddle for next year, lawmakers will also have to cut into the spending plan for current fiscal year, which ends June 30.

The forecasters reduced the revenue estimate for this year by $1.1 billion, leaving lawmakers with a $706.3 million hole to fill.

Underlying the grim numbers is a locked-up credit market that has driven down consumer spending. Baker suggested during discussion with her fellow forecasters that the change to spending habits could be permanent.

“I don’t know that there’s going to be a snap-back like you normally see,” she said.

Others were more skeptical, noting America’s consumer economy seems to have hard-wired some spending habits into the nation’s culture.

“Those habits don’t just die over a couple of a years,” said Don Langston, director of the House Finance and Tax Council.

The recession should end by the fall at the latest, Baker said, noting that some national economists have said the economy could bottom out before then.

“If the credit market isn’t functioning by the fall,” Baker said, “we’ve got more serious problems to worry about than just being off the revenue estimate.”