A first look at the new tax forecast. Politics at play?
For the first time in these bleak financial times, Florida’s economists are forecasting higher-than-expected tax collections that could mean fewer budget cuts and less of a chance for tax increases.
But the big question looms: How much of a windfall?
The answer is worth hundreds of millions of dollars.
The Legislature’s Office of Economic and Demographic Research estimates that an increase of nearly $230 million in the estimates for the current and following budget year.
Gov. Charlie Crist’s office forecast: $852.1 million.
The Department of Revenue: nearly $934 million.
The differences in the forecasts of the legislative and executive are even greater two years out, but that’s so far away in such a volatile economy that the number will invariably change. Still, the difference is large.
The numbers for the current and following budget years have particular significance for Crist, who will use these figures to build his 2010-2011 budget that he’ll release in January. The smaller the surplus, the greater the chances for budget cuts and need for additional revenues: Taxes, fees or money from the star-crossed Seminole gaming compact.
But even with the increases, Crist and the Legislature is still looking at a deficit of anywhere from $1 billion to $3 billion. So it's not all good news. Medicaid deficits are growing. Property values used to help fund schools are falling. A shortfall in the state's retirement fund is widening.
This much is almost guaranteed: Crist will find something to brag about here. And might mention that next year’s tax collections overall will be higher than the current year. What he might not mention: That’s because he and the Legislature raised $2.2 billion in taxes and fees.
Suspicious minds (are there any other type) in the Legislature note that the estimates of Crist’s office has a clear benefit for him.
But the Department of Revenue Estimate is even higher. And the tax department is more immune to political pressure. So it looks like a legitimate difference of opinion between economists.
Also, the differences might not seem so large if you figure that the general revenue fund stands at $21 billion. It’s composed of so many tax sources that slight differences in individual categorical forecasts produce a big bottom-line difference.
At issue today: How fast will the economy improve, driving sales-tax collections, the mainstay of the general-revenue fund, which pays for courts, schools and Medicaid
It looks like the “cash for clunkers” program worked and boosted sales-tax collections by about $50 million. But the question is: Did more people just buy earlier, meaning fewer people will buy later. Also, the state is paying out fewer corporate-income tax refunds than forecast.That means businesses either didn't overpay their taxes as much as thought, or they'll be seeking refunds later in the year.