TALLAHASSEE — Florida will have $1.5-billion less than it needs to meet its budget this year, according to economists who downgraded estimates Friday of how much money the state will collect.
The culprits are the same, but the problem has grown much worse than experts anticipated in March. Florida's slumping housing market continues to lead the way along with higher prices for gas and food, all of which sharply reduce tax collections.
Not only have tightening credit markets kept people from getting mortgages, but also auto loans. And tourism, once a bright spot in a poor economy, is starting to trail off as the European markets cool.
"I believe these sort of doldrums will continue probably well into 2009," said Mike Duckett, senior economist in Gov. Charlie Crist's office, during Friday's revenue estimating conference.
The news came the same day that a state agency announced Florida had lost 96,800 jobs since July 2007.
Officially, economists lowered their revenue projections by $1.8-billion for the fiscal year that began July 1, about 7 percent below the March estimate.
But the Legislature set aside more than $300-million last year, leaving a deficit of roughly $1.5-billion.
The bulk of the lower estimate is due to falling sales tax collections, which pay for day-to-day state operations. The new estimate projects Florida will collect just $18-billion in sales taxes this year, $1.2-billion less than estimated in March and $1.4-billion less than $19.4-billion collected two years ago.
Crist did not react to the news and instead spent a second day touting a plan to fast-track construction and other state projects across the state. He predicts it will stimulate the economy.
But the governor will have to confront the situation soon. By law, Florida — unlike the federal government — can't run a deficit. Crist's options:
• Tap into reserve funds. The Legislature has given him authority to withdraw from the state's post-hurricane recovery fund or its health care endowment. About $1.6-billion is available.
• Make permanent an executive order cutting allocations to state agencies 4 percent, saving up to $1-billion.
• Call the Legislature into a special session to cut the budget, though that option would meet resistance in an election year.
"There's no need to panic at this time," said Sen. Mike Fasano, R-New Port Richey, saying Crist has the tools to deal with the situation for now.
News about the slow housing market — which has effectively cut construction jobs and slowed collections of real estate transaction taxes and sales taxes on paint and other ordinary household items — was the most dour Friday.
Economists said it appears the slump may continue six more months than anticipated, with prices not starting to stabilize until January 2010.
Striving for positive news, economists said it is part of a natural correction and that better times are ahead.