State Revenue Cut By $132 Million This Year, and By $135 Million the Next
FlaglerLive | August 15, 2016
State economists Monday shaved nearly $270 million off their estimate of what lawmakers will have to work with in next year’s budget process, even as election-year calls for extra spending continue and as a threat looms of a Zika hit to Florida’s economy.
The state will bring in $131.9 million less than expected in the current budget year, which ends June 30, and $135.1 million less in the next fiscal year, which begins the next day, according to the revised estimates. Under earlier estimates, the $131.9 million was expected to be leftover money that would be carried over from year to year. Its elimination brings the total hit for next year’s budget to $267 million.
Overall, lawmakers will have about $335 million more to work with in the coming fiscal year than in the current one — something that could quickly be eaten up by increasing needs in some areas of the budget.
“I wouldn’t anticipate a significant balance,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “It’s going to be tight.”
The state is still expected to run a $1.4 billion surplus in the current year — meaning the total difference between the current budget and money available next year is more than $1.7 billion.
But $400 million of that surplus is funding from the BP settlement stemming from the Deepwater Horizon disaster in the Gulf of Mexico six years ago. And lawmakers like to set at least $1 billion aside each year to shield the budget from unexpected shortfalls.
The estimates Monday marked the second time in a row that economists have reduced their forecasts of how much the state will receive from taxes.
Meanwhile, lawmakers are already laying out plans on the campaign trail for how to use whatever money the state has. For example, incoming Senate President Joe Negron, R-Stuart, has said he would like to boost higher education spending by $1 billion over the next two years.
Baker said the slowing rate of growth for state taxes over the next couple of years reflects concerns among economists that international events could become a drag on the economy. It remains to be seen what effects “Brexit” — Great Britain’s decision to leave the European Union — might have on the global economy, leading forecasters to be cautious.
“The concerns with Brexit and what it would do is definitely affecting international tourism,” Baker said. “We see that coloring our forecast in odd little ways.”
Not yet included in the models used by the state economists are the potential economic effects of the Zika virus that has hit Florida. The state Department of Health announced Monday that the number of locally transmitted cases of Zika in South Florida had risen to 30.
And while the state maintains that all of those cases were likely acquired in a very small area, Baker pointed out that concerns about the BP oil spill caused cancellations in beaches on the eastern side of the state, which never faced any major impacts from the spill.
For now, Zika will serve as a “black swan” in a proposed, annual three-year outlook for the state budget that lawmakers are required to approve each year. Black swans are generally events that have a low likelihood of occurring but would have a large impact on the state budget if they do.
“It’s not that I don’t think Zika will be a factor. … It’s because we don’t know exactly how it’s going to unfold at this moment in time, and when,” Baker said.
–Brandon Larrabee, News Service of Florida