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Florida's budget deficit outlook falls to $2.5 billion

TALLAHASSEE — A slowly emerging economic recovery, spending cuts and more federal stimulus money have helped cut a potential shortfall in next year's Florida budget by more than half to $2.5 billion, a state economist said Tuesday.

Gaps of up to $2.8 billion and $1.9 billion are forecast for the following two budget years. Lawmakers must figure out ways to eliminate the gaps because the Florida Constitution requires a balanced budget.

Legislative economist Amy Baker said nearly $800 million in spending cut from the budget for the current fiscal year, which began July 1, were a big factor in reducing next year's gap. The economic recovery, although uneven, also helped. "The recovery probably overall is very fragile," she said. "Florida's a diverse state so you are going to see some areas recover quicker than others."

The outlook does not include tax losses due to the Gulf of Mexico oil spill, which won't be calculated until later this year. They are no longer expected to be in the billions — "huge, frightening, terrifying numbers" — as originally feared, Baker told the Legislature Budget Commission.

After hearing Baker's testimony, the panel adopted a revised long-range outlook that reduces an anticipated gap between general revenue and spending deemed critical and high priority to $2.5 billion for 2011-12. It could shrink even more — down to $828 million — if lawmakers fund critical spending needs but not those considered only high priorities.

The panel also put $1.3 billion in additional stimulus money from a recently passed federal jobs bill into the current budget, now topping $71 billion. Florida received an unexpected $554.8 million for public schools and $855 million for Medicaid.

Medicaid money will supplant state dollars already appropriated for the program that provides health care to the needy and disabled. The budget includes contingency provisions for spending part of the freed-up state Medicaid dollars but most will be held in reserve. That has also contributed to narrowing next year's budget gap. There's no contingency plan for the education windfall, which increases public school spending by about 3 percent and must be passed on to local school districts.

Senate Ways and Means Chairman J.D. Alexander, R-Lake Wales, said he hopes districts can save some of it for next year when the stimulus program expires and Florida faces "an incredibly challenging budget outlook."

Federal law says it must be spent in the current budget year for rehiring laid off teachers and staff and other personnel expenses, but Alexander said that should free up state and local money, which can be saved.

Wayne Blanton, executive director of the Florida School Boards Association, said he supported Alexander's idea but it may not be possible. It depends in part how federal education officials interpret the law and on negotiations with teachers unions that have seen members laid off and go without raises, Blanton said.

Republicans have a majority in the Legislature and on the budget panel. It approved the additional federal dollars without debate, although GOP gubernatorial candidate Rick Scott has said Florida shouldn't accept stimulus money.

The panel's chairman, Sen. Rudy Garcia, a Republican from Hialeah and Scott supporter, defended the stimulus spending.

"Rick Scott and I need to have some more discussions on critical need issues that were helped by the stimulus dollars," Garcia said later. "There are particular families and children and people on Medicaid that have received help — critically needed help."

Florida's budget deficit outlook falls to $2.5 billion 09/14/10 [Last modified: Tuesday, September 14, 2010 10:55pm]
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