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As Florida's revenue runs short, talk turns to new taxes

TALLAHASSEE — As Florida continues a downward financial spiral, state economists forecast Friday that legislators will have about $3.5 billion less to patch back-to-back budget deficits this year and next.

The new estimates pose a financial and political burden on Gov. Charlie Crist and fellow Republicans who control the Legislature. Lawmakers suspected Crist's budget proposal, issued last month, was based on overly optimistic numbers.

Now they know they're right.

A growing number of Republicans say they might not be able to fully plug next year's deficit with federal stimulus money, as Crist has proposed. Even with the Washington cash, next year's budget deficit could run as high as $3 billion.

So Republicans and Democrats alike are talking about slapping more taxes on everything from pornography to cigarettes to gambling.

"We're in a corner. We can't bury our head in the sand. We must consider all options, and that means new revenue," said Miami Republican Rep. Juan Zapata, who's sponsoring legislation to raise the 34-cent state cigarette tax by 65 more cents.

Zapata said his plan is encountering resistance from fellow Republicans. "They want to be hardheaded during difficult times," he said.

Democrats reacted to the latest bleak financial news by reminding voters that Republicans controlled the state and federal power structure for much of the past decade, with one Bush presiding as Florida governor and the other as president.

"The Republicans caused this, let them figure this out," said Key West Rep. Ron Saunders, the state House's designated Democratic leader in 2010. "Democrats have done their part. We passed the stimulus package, and not one Republican from Congress voted for it."

Political finger-pointing aside, the condition of Florida's economy isn't in dispute.

State economists used words like "deteriorating'' or in a "downturn'' or "negative'' when they held their meeting Friday to assess tax revenues that fill the state's general-revenue fund, which accounts for schools, health care, prisons and courts.

The 2009-10 budget year, which begins July 1, will mark the fourth year in a row that tax collections have declined. Next year, the state's general-revenue fund might take in $19.9 billion. That's about the same as the 2002-03 level.

Amy Baker, coordinator of the Legislature's Office of Economic and Demographic Research, said Florida's economy won't improve much until 2011. Then, the credit market should improve and a big chunk of baby boomers will hit retirement age and move to Florida along with their money.

By the end of their meeting, the economists agreed that their November tax collection estimate for the current year was off by $1.1 billion. Next year, it's off by $2.4 billion.

This year's budget hole can be completely closed with stimulus money. Senate budget chief J.D. Alexander estimates next year's deficit will stand at roughly $3 billion once the federal stimulus money is plugged in. And that doesn't take into account a projected $1 billion drop in school property tax collections due to sinking property values.

That all but guarantees that school spending next year will be flat if legislators don't raise tax rates.

The economists said Floridians are spending less, saving more of what little they have and losing jobs and homes at an ever-increasing rate. Tourists are staying away, and population growth is flat. That means lower-than-expected tax collections from sales, corporations and real-estate transactions.

"It's almost like the economy's gone off the cliff, and it keeps falling," said Tim Campbell, an economic analyst. "We're expecting job losses for a considerable time yet in our economy."

Sen. Carey Baker, a Eustis Republican, said he is opposed to passing a "broad-based'' tax increase that could help the budget but hamper the economy. "If I'm going to raise taxes, someone threw out taxing porn. I could do that. Taxing gambling, I'd support that if I had to," Baker said.

Sen. Mike Haridopolos, a Melbourne Republican, said he could support an increase in slot machine gaming that could be taxed. But that's a long shot, say some House Republicans. The House has resisted the governor's taxable gambling deal with the Seminole Tribe of Florida.

Lawmakers in both chambers say they're concerned that the "strings attached'' to the stimulus money essentially prohibit them from cutting health care and education. That's nearly 80 percent of the general revenue budget. The rest — public safety, courts and roads — will be politically tough to cut.

Crist already proposed raising some fees, but senators last week demanded to know what additional tax and fee increases he would accept. Crist ducked the question.

"Oh," he said last week, "I'll give a clearer direction at the appropriate time."

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

As Florida's revenue runs short, talk turns to new taxes 03/13/09 [Last modified: Monday, March 16, 2009 9:23am]
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