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Florida's budget shortfall forecast grows, making tax cuts look harder

TALLAHASSEE — Florida's budget continues to bleed red ink.

State economists forecast Friday that Florida's budget shortfall will grow yet again — now by about $135 million. That could bring next year's gap to more than $3.75 billion.

The shortfall, though smaller than previous forecasts, is the result of lower-than-anticipated tax collections in what economists say is a surprisingly "anemic" economic recovery.

The new forecast just makes a bleak budget year all the bleaker. It means that schools, prisons, courts, health care for the poor and elderly, environmental programs and road building programs face even more cuts and have little chance of being kept whole when compared to the current budget year, which expires June 30.

The shortfall also has political ramifications for Gov. Rick Scott, who pledged to deeply cut taxes and fees by about $2.4 billion. Legislators say they just can't do that.

The Senate's top budget writer, J.D. Alexander of Lake Wales, said the Senate will offer a modest tax cut. But "nowhere near" what Scott wants.

"He's the governor and we're trying to support his leadership," Alexander said. "We're going to see what's politically possible and what's responsible."

Alexander won't say what the Senate is considering. He said talks are preliminary, nothing's on paper and he's trying to come up with some sort of compromise that the governor, a fellow Republican, would support.

The Friday forecast is significant because it forms the backbone of the financial assumptions lawmakers will use this spring to cobble together next year's budget. This year's budget is $70.4 billion; Scott wants to reduce it to about $66 billion.

The House Democratic leader, Ron Saunders of Key West, said this probably isn't the session to take money away from a state budget that has been steadily reduced over the years.

"Standing alone, tax cuts sound good," Saunders said. "But looking at the situation now, I don't see how they're going to do it."

Saunders said that Scott's plan to phase out the corporate income tax to entice businesses to Florida would be offset by the businesses who don't want to move to a state where per-pupil spending is cut by 10 percent, as Scott proposed.

"What business owner would want to send his kids to school in a state like that?" Saunders asked.

State workers could bear the brunt of the bad budget times. The Legislature plans to force them to divert more of their salaries into their retirement plans, a move that has the effect of a pay cut that ranges from 2 percent to 5 percent, depending on the proposal.

College students could face a maximum 15 percent tuition increase in a House plan. And in both chambers Medicaid recipients could see their health care benefits reduced and capped by HMO-style private health plans.

Hospitals are preparing for wholesale changes — and cuts — to the Medicaid program as well. Among them: rival plans to rejigger a complicated hospital-funding formula that disproportionately helps Miami's Jackson Memorial Hospital, the state's largest provider of charity care.

The head of the Legislature's Economic and Demographic Research office, Amy Baker, said it's tough to accurately forecast the size of next year's budget shortfall because the Legislature is in session now and is already changing the size and scope of its programs, thereby reducing future expenditures.

She said there's good and bad in the Friday forecast.

"We're in a much better place, a much more stable place than in previous years," Baker said. "But even losing $150 million … is extremely painful."

Marc Caputo can be reached at mcaputo@miamiherald.com.

Florida's budget shortfall forecast grows, making tax cuts look harder 03/18/11 [Last modified: Friday, March 18, 2011 10:10pm]
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