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Florida's estimated budget shortfall grows to $3.5 billion

TALLAHASSEE — Rick Scott's campaign promise to cut property and corporate-income taxes got a little tougher Tuesday when state economists forecast that anemic tax collections could punch a $3.5 billion hole in his first proposed budget.

The big budget shortfall is at least $500 million more than recent estimates, and it could increase if Florida's economy worsens.

Cutting taxes would make the budget gap bigger. But Scott won't say just what he'll reduce in the budget — which he'll propose in February — to offset his tax cuts. Scott will be sworn in Jan. 4 as Florida's 45th governor.

When asked by reporters to provide budget-cut details and whether that will include employee layoffs, Scott repeated familiar refrains such as "streamlining government'' and ''looking at programs." He also said he "might'' privatize prisons.

Scott briefly spoke with reporters in Fort Lauderdale after the political newcomer hosted a meet-and-greet with South Florida legislators, who also tried and failed to wring specifics from the Republican.

Rep. Jim Waldman, D-Coconut Creek, quizzed Scott about his plans to cut property taxes 19 percent when those taxes pay for schools, police officers and other local services.

"All the savings are at the state level," Scott said. "I'm not changing how much we send to the counties."

Scott didn't specify that his tax cut plan only targets the state-set property tax that pays for schools — at a cost of about $1 billion — and that he plans to find other state revenue sources so that the K-12 portion of the budget isn't sharply reduced.

"My goal is not to change funding for the public schools," Scott said. "My goal is to find funding at the state level."

He wouldn't identify that source of funding or say what programs would lose out as a result of shifting money from one part of the state budget to the other.

In recent weeks, state economists have estimated that, because of declines in property values, schools will receive about $150 million less statewide if tax rates remain the same. That budget hit was somewhat blunted by forecasts that class sizes wouldn't swell.

But the student population is on the rise, especially in South Florida, which is expecting about 6,000 more students from disaster-ridden Haiti.

Sales taxes make up the biggest decrease, accounting for 67 percent of the $1.2 billion in lower-than-anticipated state revenues forecast Tuesday. Corporate taxes — which Scott plans to eliminate — are also decreasing.

Overall, however, state revenues are still growing, but at a much slower rate than anticipated when economists last met in August.

"We're definitely seeing year-over-year growth," said Amy Baker, the Legislature's chief economist. "But it's very, very slow."

This economic forecast will underpin the budget Scott will propose. The economists from the governor's office, tax department and Legislature will meet again before the Legislature convenes its 60-day session in March to hammer out the final budget for the fiscal year, beginning July 1.

The top budget writers for the House and Senate are also puzzled by Scott's pledge to cut taxes in a year of big budget holes.

"I haven't heard from him how he'll do it all," state Sen. JD Alexander, R-Lake Wales said, echoing his House counterpart, state Rep. Denise Grimsley, R-Sebring.

So far, the soft-spoken Scott has listened more than talked to legislators. From the questions Scott posed, it was clear that he wants to reform state workers' pensions and may tackle teacher tenure.

"What do you all think about employees contributing to the pension plan?" Scott asked legislators. "We are the only state in the country that state employees don't contribute (to their pensions)."

The sea of red ink increases the likelihood that Scott and his fellow Republicans who control the Legislature will also fire state workers, cut pay and reduce programs like Medicaid — the biggest budget cost driver. Right now, the state budget stands at $70 billion, but $2.6 billion of that is federal stimulus money that the state won't get next year.

As of now, though, specifics remain elusive.

After Scott met with lawmakers, Waldman summed it up this way: "I walked out with no clarity on anything."

Florida's estimated budget shortfall grows to $3.5 billion 12/14/10 [Last modified: Wednesday, December 15, 2010 9:40am]

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