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Florida’s
tide of red ink not so high
TALLAHASSEE, Fla. – Sept. 8, 2010 – Florida’s looming budget
shortfall has been sliced in half by state analysts who credit
federal stimulus dollars, years of spending cuts and Indian
gambling money – but the state still faces a $2.5 billion hole.
A year ago,
state forecasters projected a $5.5 billion gap for 2011-12, as
the remnants of the recession and a stone-cold housing market
looked certain to dig deeply into state tax collections. But in
a revamped forecast slated to be reviewed next Tuesday by the
Legislative Budget Commission, analysts now say the tide of red
ink may stop at the $2.5 billion mark.
“This is what
we see at this moment,” said Amy Baker, coordinator of the
Legislature’s Office of Economic and Demographic Research, among
several panels making the latest forecast. “The revenue side is
slightly better. And the spending has leveled off.”
Baker
conceded, however, that the revised projection does not take
into account the Gulf of Mexico oil spill impact on state
coffers. The Panhandle tourist slump that coursed through the
summer – coupled with increased spending from oil clean-up
efforts – is still proving too difficult to gauge, she said.
“It’s a big
caveat in the forecast,” Baker said. “We’ll know more in coming
months.”
While the
expected budget hole has diminished, the debate over how to fill
it remains largely unchanged. The Legislature’s ruling
Republicans have already set the stage for another round of
belt-tightening – and could draw strength from the economists’
crediting reduced state spending as helping yield the improved
forecast.
“It’s more
pleasant to hear that things are getting better,” said Sen. Don
Gaetz, R-Niceville, who chairs the Senate’s Select Committee on
Florida’s Economy. “But I think you have to credit the
Republican majority for cutting recurring spending so we don’t
find ourselves hurtling toward the precipice.”
But Gaetz
said he was wary of the suddenly improved forecast, noting that
the state’s troubled housing market has shown only feeble signs
of life and Medicaid costs are on track to top $20 billion next
year, demanding an additional $1.4 billion in taxpayer dollars,
according to analysts.
Gaetz said
the forecast, while based on extensive data, “is a highly
sophisticated Ouija board.”
Democrats,
who have pushed for closing some corporate-tax exemptions and
enforcement of stricter Internet sales taxes, also said the
revised shortfall eases pressure – but only slightly.
“We’re not
facing as big a deficit, but it’s still a big one,” said Rep.
Ron Saunders of Key West, designated as the incoming House
Democratic leader. “And the federal stimulus money is going
away. A lot also is going to depend on who is governor.”
The state’s
current $70.2 billion budget is propped up by $2.5 billion in
federal stimulus dollars – the last installment of $27 billion
in cash that flowed to Florida from Washington over the past
three years. The latest round was enhanced by an additional $700
million in federal Medicaid money that came to Florida last
month.
But most
agree that Florida’s budget-balancing options have narrowed.
House Republicans led by Speaker-designate Dean Cannon, R-Winter
Park, had once pushed for expanding offshore drilling in Florida
as a potential money-maker – an idea they concede the Deepwater
Horizon oil spill has taken off the table for the foreseeable
future.
Similarly,
GOP efforts to overhaul Medicaid also appear blunted. Medicaid
programs – which now command one-quarter of the state budget and
serve 2.7 million Floridians – must be maintained at current
levels for the state to collect the additional money approved by
Congress last month. The congressional health care overhaul
backed by the Obama administration also limits state changes in
coming years.
Rick Scott,
the Republican nominee for governor, opposed the federal
stimulus package – and also has made a key budget provision part
of his campaign by calling for elimination of the state’s
corporate income tax. The move, if embraced by the Legislature,
would erase $1.8 billion from next year’s budget.
Scott has
proposed rolling back state and local government spending levels
to 2004 levels – before Florida’s housing boom spawned
skyrocketing tax collections that have since evaporated. So far,
though, Scott has offered few details on budget cuts.
Democrat
Alex Sink has outlined a more sweeping “government reform and
accountability plan” that she says can yield $700 million in
first-year spending cuts. She proposes measures such as reducing
state office space and unneeded layers of management, and
bolstering the state’s hand in contracting.
But Sink said
that as the state’s chief financial officer with a background in
banking, she’d bring an ability to ferret out wasteful spending
while also growing the state’s economy.
“While it is
important to understand the budget deficit we will face, Florida
is still in an economic crisis, with too many families in our
state struggling and over one million Floridians out of a job,”
said Sink spokeswoman Kyra Jennings.
Source: News
Service of Florida, John Kennedy
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