With senators in his own party voicing skepticism, Republican Gov. Rick Scott's budget director has sent a letter to executive branch agencies, making the case for $1 billion in tax cuts in the next legislative session in addition to a new $250 million fund to attract jobs and a multitude of high-dollar demands by the agencies.
In the memo, Cynthia Kelly suggests that all of this and more can be accomplished without having to make cuts in existing programs.
"Because of the state's robust surplus," Kelly writes, "the governor is also proud to accept many of your budget recommendations, especially those that provide a positive return on the state's investment."
Kelly writes that Florida will have $1.3 billion more in new general revenue next year. She said the projected surplus number often quoted by legislators and in news accounts of $635 million is actually the "ending balance" on the state's balance sheet after funding critical and high priority needs is taken into account. Kelly added that the state's long-range financial outlook, approved by the Legislative Budget Commission in September, includes additional discretionary spending of nearly $1 billion next year.
"Bottom line," Kelly writes, "there is more than sufficient revenue to fund all of the state's mandatory increases, as well as the governor's priorities for your agencies, the Florida Enterprise Fund and the proposed $1 billion in tax cuts."
Senate President Andy Gardiner, R-Orlando, has directed senators to take a cautious approach on tax cuts, and sent them a memo that suggested $250 million in tax cuts as a starting point, or one-fourth of what Scott is proposing. Gardiner also has noted that a sizable chunk of the projected surplus is one-time or non-recurring money that cannot be used to fund permanent programs.
The full text of Kelly's memorandum is below.
TO: Governor’s Agency Heads
FROM: Cynthia Kelly, Director
Office of Policy & Budget
DATE: November 9, 2015
RE: FY 2016-17 Budget Update
I wanted to take the opportunity to update you on the development of the Governor’s budget recommendations for FY 2016-17 and thank you for all of the hard work and assistance provided by you and your staff during this process.
As a result of Florida’s economic turnaround, including the addition of almost 1 million new jobs in less than five years, Florida will have a record $29.8 billion of General Revenue available next year – including $1.3 billion in NEW General Revenue. Our revenue is continuing to grow while Governor Scott has cut taxes over 50 times, including $500 million in 2014 and over $400 million this year.
This level of revenue exceeds this year’s recurring General Revenue budget by $3.4 billion.
Therefore, because of this historic level of revenue, Governor Scott is proposing to cut $1 billion in taxes and make a one-time investment of $250 million towards economic incentives at Enterprise Florida this year. Because of the state’s robust surplus, the Governor is also proud to accept many of your budget recommendations, especially those that provide a positive return on the state’s investment.
You may have seen recent press reports that questioned the Governor’s ability to balance the proposed tax cuts and the new $250 million Florida Enterprise Fund, while funding the necessary expenditures of state government.
Let me clarify that the “surplus” often quoted is based on the Long Range Financial Outlook adopted by the Legislative Budget Commission (LBC), which reported a $635 million ending balance. That $635 million figure is the ending balance after funding not only critical needs such as mandatory estimating conference adjustments like the $600 million Medicaid increase, but also “other high priority” needs AND revenue adjustments -- including $250 million in tax cuts. The “other high priority” needs include discretionary spending of almost $1 billion. While the LBC includes this funding in the plan to reflect projected increased spending based on historical averages in previous budgets, the actual allocation of these funds is not yet determined, meaning these funds are available to fund specific agency requests and Governor priorities.
A more appropriate “surplus” is the amount of funds available after funding the mandatory increases only, which is reflected in the LBC plan for Tier 1 Critical needs – a total of almost $1.6 billion.
Bottom line, there is more than sufficient revenue to fund all of the state’s mandatory increases, as well as the Governor’s priorities for your agencies, the Florida Enterprise Fund and the proposed $1 billion in tax cuts. I look forward to working with you over the next few weeks as we prepare to present these funding recommendations to the Legislature.