Miami Herald: Florida revenue projections mostly on target

Mar 9, 2010

The Miami Herald published this article on March 9, 2010.


Associated Press Writer

TALLAHASSEE, Fla. — Cash-strapped Florida lawmakers aren’t getting any help from a new general revenue estimate being developed Tuesday, but the figures aren’t causing them any grief, either.

State economists were finalizing a forecast expected to differ by just fractions of a percent from the last one they submitted in December for the current and next four budget years.

The bottom line for the Legislature is it’s still looking at a gap ranging from about $1 billion to $3 billion between the money expected to come in during the budget year beginning July 1 and spending needed to meet growing demand and rising costs for critical services. Those include public schools and health care.

“For legislative purposes it’s probably going to be undetectable to them in terms of what they’re facing,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research.

General revenue accounts for about a third of the state’s annual budget. It consists mainly of sales tax but also includes corporate income, insurance premium, tobacco and alcohol taxes as well as motor vehicle and other user fees. It pays for most day-to-day operations including education and the state’s share of Medicaid.

The rest of the budget consists mostly of trust funds that use specific taxes and fees for designated purposes such as gasoline taxes for road and bridge building and maintenance, and lawmakers have little control over them. The budget also includes billions in federal revenue sharing such as Medicaid funding.

Gov. Charlie Crist used the December general revenue estimate in developing his $69.2 billion budget recommendation for 2010-11. Lawmakers will use the new forecast to write the final budget that then will be submitted to Crist.

The December forecast, which included $21 billion for the current year and $22.4 billion – a 6.6 percent increase – for 2010-11, was nearly spot-on.

That’s because the state and national economies have settled down in recent months after more than two years of nearly constant turmoil. The volatility resulted in estimates that often missed the mark by a billion dollars or more, requiring midyear spending cuts.

“We’re definitely settling into a pattern of predictability,” Baker said. “We’re stabilizing and so things are starting to behave like we thought they would.”

The economists from the Legislature, Crist’s office and the Department of Revenue are in agreement Florida’s economy is beginning to recover although very gradually.

It hasn’t experienced the kind of external shocks that upset prior forecasts.

“Florida not only had the issues with coming out of the housing boom that we were trying to fold into our forecast, but then we got caught up in the national recession and the global recession,” Baker said. “We are on a path that’s normal.”