Revenue Forecast Could Force Budget Belt Tightening

Sep 16, 2016

Incoming House Speaker Richard Corcoran.
Credit Florida House of Representatives / Florida House of Representatives

Florida lawmakers will face some tough decisions next year as they draft the state budget.  Leaders are already warning cuts are in store.

About a year ago state economist Amy Baker warned lawmakers there were only about $75 million dollars for ongoing projects.  If they committed any more than that the state budget would quickly be in the red.  The picture isn’t any better this year.

“Looking at everything you do have enough money available to you to avoid a budget gap in fiscal year 17/18,” Baker tells members of the Joint Legislative Budget Committee.  “However, you don’t have any money that would be left over to allow you to deal with new discretionary issues.”

There actually is some money, but the $7.5 million lawmakers have to work with is vanishingly small in comparison to this year’s $82 billion budget.  Incoming House speaker Richard Corcoran says the continuing growth of Florida’s population will likely drive that figure higher.  New spending needs could easily outstrip the surplus, and Baker says the news is even worse for the next two years.

“What you see as you look out is a $1.3 billion in tier three shortfall as you move into year two which is 18/19,” Baker says, “and it grows to $1.9 billion in year three.”

Former Senate Budget chief Lisa Carlton says lawmakers have their work cut out for them.  The Republican served for a decade in the state Senate starting in 1998, and she explains budgeteers will have to take a long hard look at where money is going in order to free up existing funds.

“Setting allocations is going to be a very challenging task this year with the revenue shortfall that’s projected,” Carlton says.  “Now what that means is there also will have to be a real evaluation of what items are considered essential in state government.”

Items like Medicaid, K-12 education, and public safety are state priorities, but Carlton says empty coffers could put higher education, transportation and environmental spending at risk. 

And that could make for a turbulent legislative session. 

Incoming Senate President Joe Negron has already signaled he wants to establish water storage south of Lake Okeechobee, and steer more money into public universities without raising tuition.  His House counterpart Richard Corcoran won’t rule those projects out but he says there will have to be cuts. 

“Are they on the table?  Absolutely,” Corcoran explains.  “But I think that’s going to be incumbent on the House and the Senate going through and figuring out what other things we’re going to cut to make room for those things.” 

“And are there things in the budget that are not nearly as essential as the stuff that maybe Senator Negron or house members or senate members are talking about?” Corcoran asks, “Yeah, I think there’s a lot of things in the budget that are not nearly as essential as stuff that’s out there that we could be doing.”

Republicans have controlled the state Legislature for two decades, and when Governor Rick Scott signed this year’s budget he bragged about cutting $1 billion in taxes over two years.  From one perspective, that’s lost revenue that could bolster a flagging balance sheet, but Corcoran doesn’t see it that way.  He says Florida has a spending problem, not a revenue problem. 

“I don’t care if you’re a Republican or a Democrat,” he says, “every single government person comes up here and spends money like a teenager in a mall with a first time credit card and they’re locked in there.”

“It’s got to stop.  And we’ve got to start cutting up the credit cards.”

Corcoran didn’t say where in the budget he’ll find savings.  But Lisa Carlton is optimistic lawmakers will find a way to strike a balance between wants and needs.

“When there are fewer recurring dollars,” she says, “legislators sort of buckle down and they really look at the priorities of their district and what are the essential needs of their districts and their communities.  And so it really makes for a little bit more structured budgeting process when there are fewer recurring dollars.”

And she warns—as Corcoran does—that the September projection isn’t the final word.  Lawmakers use another estimate to craft the budget, and things can change between now and then.  But the last time that estimate came out, forecasters reduced their outlook by about $400 million.