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Florida Now Has a $437 Million Budget Surplus, But 3% Pension Decision Looms

| December 6, 2012

Where a $2 billion question looms. (Gregory Moine)

Initial, positive indications about Florida’s budget for the coming fiscal year could be overtaken by events if the Florida Supreme Court strikes down changes to state employees or the nation plunges over the fiscal cliff, the state’s top economist warned Wednesday.

Speaking to the first meeting of the Senate Appropriations Committee, Amy Baker — coordinator of the Legislature’s Office of Economic and Demographic Research — told lawmakers that the current projection of a $436.8 million budget surplus could still change.

“I think the message is that this is not a large cushion,” Baker said. “It could evaporate on you if economic circumstances turn against us.”

Lawmakers have long watched a decision in the case challenging a 2011 law that required employees to contribute 3 percent of their income to their retirement funds, along with other changes. It could cost the state around $2 billion if the Supreme Court strikes down the law.

A Leon County circuit court judge voided the changes for employees hired before July 1, 2011; justices seemed hesitant about upholding that ruling at oral arguments earlier this year.

But Baker said the so-called “fiscal cliff,” a package of federal spending cuts and tax increases set to take effect on Jan. 1 unless Congress and President Barack Obama can reach agreement, also looms large.

If there is a long delay in reaching a deal — one that stretches past January and into March — it could cost the state as much as $375 million, Baker said, comparing it to the debt-ceiling fight in August 2011 that dragged down the state economy.


Even if there is an agreement, it is likely to include some measures that will reduce estimated state income by hundreds of millions of dollars, Baker said.

“There is no likelihood that Florida will escape from the final decision with no changes to our budget,” Baker said.

The uncertainty has pushed lawmakers who are optimistic about the numbers to nonetheless urge caution. Senate Appropriations Chairman Joe Negron, R-Stuart, told the committee that he wanted to boost the budget stabilization fund, one of the state’s reserves, to $1.5 billion. That’s at least $500 million over where the fund is projected to be, Negron said.

After the meeting, Negron told reporters that might be as much as the Legislature can do.

“You can never have too much in a reserve, but realistically I think $1.5 billion is a reasonable target to shoot for,” he said.

Sen. John Thrasher, R-St. Augustine, said the situation should send a message to advocates for various state agencies in the audience.

“They need to be on notice that there is a lot of uncertainty out there and that this budget if these two things come to fruition is going to be very, very difficult to put together,” Thrasher said. “And I think either one of them could devastating to us.”

–Brandon Larrabee, News Service of Florida

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9 Responses for “Florida Now Has a $437 Million Budget Surplus, But 3% Pension Decision Looms”

  1. Lonewolf says:

    State employees need to step into the real world where people pay for their pensions or 401K’s

    • Samuel Smith says:

      State employees frequently make less than what they would in the private sector in exchange for those pension benefits.

  2. Binkey says:

    State employees live in the real world, it may not be your world, but it doesn’t mean it’s not the real world.

    I expect the supreme court will reverse the lower courts decision on the 3%.

  3. Magnolia says:

    The point is not how much these people make, it is that pension debt is taking this country down. Give them a raise, let them fund their own pensions. It will be cheaper. The current way of doing business is not sustainable.

  4. confidential says:

    What is not sustainable are the tax exemptions to the billionaires, millionaires, multinationals and other corporations operating in this country. Our problem is not spending but lack of revenue. The above mentioned do not reinvest the funds that we exempt them to pay, but instead keep them in heavens overseas. When the middle class that is the one that really sustains America, has jobs spends here at home their earnings and make real small local businesses successful and also our government as well as they pay income taxes and no longer have to get unemployment if they have a job..Of course we have a budget deficit with all the mentioned above paying from zero, 1% to 14% when they should be paying 35% on their revenue. Further more some giant corporations get billions in tax refunds or tax incentives from our hard earned and ever eroded middle class salaries taxed.

  5. JoJo2 says:

    Florida is backward when it comes to pensions, employment, equal rights, employee rights, unions, civil liberties and northern pride. Did I just say all of that.

  6. Anonymous says:

    A pension was promised when they accepted their positions as part of their overall compensation package, and was based on a decision made in the 1970s. If they want to make new employees contribute so be it but not those hired before hand and under the old rules.

    I think that most of the people complaining are not entitled to a pension and feel that since they don’t get one no one should, which is a common way that people think.

  7. Stevie says:

    Follow California and make the situation worse….raise taxes and watch revenues fall….it always happens.

    http://www.oc-breeze.com/2012/12/07/25235_california-state-revenues-10-8-below-budget-projections-in-november/

    The people that promised milk and honey pensions either lied or didn’t know what they were talking about or both.

  8. Diego Miller says:

    It seems that pensions especially for government employees at state and county levels is becoming unaffordable because of lost tax revenues. The three legged stool, Roosevelt talked about, Pensions, savings and social security are slowly falling by the wayside. 401 K’s, which were created by the Insurance industry, are not working. Most individuals aren’t savvy investors especially in today’s volitile markets.
    Flagler County employees have seen cut after cut in health insurance, pensions and working conditions.
    I wonder how many times Mr. Coffey has visited the Public Works or General Services Dept. and said thanks guys, your doing a great job. I bet never

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