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Revenue at Risk

By James Call


Tallahassee, FL – Two veteran lawmakers say the Legislature needs to take another look at the state budget. The $70-billion plan pays for schools, law enforcement and public health programs, among other things. It went into effect Thursday, but James Call reports it may already be in trouble.

Hialeah Senator Rudy Garcia leads the Joint Legislative Budget Commission, which keeps the state budget balanced.

"Trying times ahead, regardless of the oil spill, there was going to be difficult times for Florida. Now with the added value of the oil spill the challenge is going to be far greater."

Lawmakers built the $70-billion budget on an assumption and a hope. They assumed Congress would send more money for Medicaid, and they hoped the economy would start to grow. That hope may be suffocated by oil. The Gulf oil spill puts at risks two major revenue streams: property taxes on real estate, which helps pay for local schools, and sales taxes driven by tourism. Only now are the economic effects beginning to filter in to Tallahassee. Florida State University Professor Mark Bonn is a tourism expert and supervises a team of hospitality graduate students interning at western panhandle resorts.

"My read on it is that the people who have not cancelled now are coming, okay? Anybody that wanted to cancel back in June for July or August probably already has done so. The leak situation is still ongoing, and so the people that are on the books now are going to be coming to Florida to that particular area."

Bonn estimates hotel bookings are off by about 25-percent. It is unclear what that will mean to the state's bottom line. In the western panhandle, a lot of the rooms are filled by cleanup workers, scientists, officials and reporters lured by the oil. Bonn notes their spending habits are different than a tourist on a holiday looking for a good time.

"These people are going to be doing other things rather than riding wave runners, but they will still stay in lodging properties; they will still eat in restaurants, do some shopping. So the collectible sales tax is not going to totally disappear. We're not going to totally feel a void, but there will definitely be a drop. There will be a significant drop."

Because of the uncertainty, in June, the Department of Revenue withdrew sales tax estimates it sends to local governments. Lawmakers assumed a growing economy would generate more tax revenue; however the latest report from the University of Florida's Bureau of Economic and Business Research indicates that is now unlikely. The other assumption built into the state spending plan was an additional billion dollars from Washington for Medicaid, health care programs for the poor. Congress could act after November. Key West Representative Ron Saunders voted against the budget in the spring and now says the Legislature needs to rework it.

"It's always very dangerous to appropriate money you don't have, especially when you are depending on the federal government to get it to you. At the federal level, they have not reauthorized the flood program that is very important to the state of Florida; they have not reauthorized unemployment compensation. So there are a lot of things because of the politics in Washington DC that are not happening, including FMAP. So if we don't get those FMAP dollars a bad budget situation will be very much worse."

The budget covers expenses through June 30th 2011. As it stands now, it represents the first increase in spending in four years. It includes more money for nursing homes, university scholarships, and the environment. However, Senator Garcia says that money is now at risk.

"We are going to have to look at what adjustments need to be made, and I foresee a special session, and I foresee this budget commission working long hours."