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Florida's revenues not as dire as first thought

Here's a switch for a state accustomed to falling revenues: Florida will have more money to spend next year than expected.

The state's general-revenue fund is expected to take in about $338.4 million more than anticipated for the budget year ending June 30. Next fiscal year, the budget is likely to reap about $312.6 million more than anticipated, the economists estimated Friday.

Fueling the increase: stronger home sales due to rock-bottom prices, better-than-expected corporate tax earnings and a rise in sales tax collections, partly boosted by the "cash for clunkers'' car-buying program.

The new forecast is good news for taxpayers and politicians alike because it makes tax increases and deep budget cuts less likely. It's also a sign that the experts who chart state finances are getting a better handle on the state's volatile economy, which is plagued by rampant unemployment.

But the spike in tax collections is only enough to offset newly projected deficits in the health and education sections of the budget.

Estimated shortfall for next year's budget: about $2.7 billion to $1 billion, depending on which programs lawmakers want to trim. The shortfall number is nearly unchanged since a budget update legislators received in October.

House Speaker Larry Cretul, R-Ocala, found little to cheer in the new numbers.

"While we are cautiously optimistic due to today's economic predictions, we continue to be realists as well," he said in a written statement. "The facts have not changed that Florida still faces significant economic challenges in the years ahead."

Cretul pointed out that the estimate issued Friday won't be used by the Legislature when it builds its budget in March. By then, the roundtable of economists and analysts from the Legislature, state tax department and governor's office will have an updated financial forecast.

Friday's estimates, however, will form the backbone of Gov. Charlie Crist's 2010-11 budget proposal that he will release in January.

For the previous three years, Crist has proposed budgets based on fall revenue estimates that proved to be too rosy by the time the spring lawmaking session started, eliciting grumbles from legislators who said the governor's plans weren't realistic.

On Friday, the governor's chief economist, Christian Weiss, and the Legislature's chief economist, Amy Baker, got in a testy exchange over their estimates. Weiss' two-year forecast of tax collections was $623 million higher than Baker's.

The more neutral Department of Revenue, incidentally, projected the biggest uptick in tax collections: $934 million over two years.

Weiss and Baker agreed that they should boost their forecast estimates and that actual tax collections for the past three months were $265 million higher than they had anticipated.

But Weiss saw a trend that suggested greater economic activity. Baker didn't. She said the increased tax collections were the result of a quirk in corporate income taxes and the popularity of the "cash for clunkers'' program that netted the state up to $50 million in tax collections.

"If you don't know, you don't gamble," Baker said.

Weiss took umbrage: "That's uncalled for. I don't gamble here. I'm trying to get the best professional estimate."

In the end, the two put their differences aside, projecting a combined $651 million increase over the next two years. The boost means this year's budget should end with at least a $1 billion surplus.

After the estimate was released, Crist didn't issue a written statement, but said this week that he was "hopeful'' that the state's finances would improve. With Crist running in an increasingly competitive Republican Senate primary, tax increases next budget year are less likely.

This spring, with deficits at extreme levels, the Legislature and Crist signed off on $2.2 billion worth of new taxes and fees as part of a $66.5 billion budget. The new taxes ensure that the general-revenue fund next year will be larger than it is this year — the first time that has happened in three years.

This year's budget included federal stimulus money that staved off cuts to schools, Medicaid and criminal justice programs. But next year — even with the new tax money and another $2.2 billion in federal stimulus money for the general revenue fund — the budget will still be in deficit.

Democrats say it's time for the GOP leadership to overhaul the tax code and consider eliminating sales tax exemptions and so-called loopholes on out-of-state corporations and Internet sales.

Republicans say it's not time to raise taxes. But they're also not sure what should be cut. Rep. Kevin Ambler, R-Tampa, said that even though Medicaid is punching a hole in the budget, lawmakers probably won't be able to do much about it this year as rolls continue to climb.

"I don't think any legislator is going to want to have the developmentally disabled and the 65-and-older crowd of Medicaid patients storming on the Capitol with their pitchforks and torches saying, 'You can't cut us off,' " he said.

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

Florida's revenues not as dire as first thought 12/04/09 [Last modified: Friday, December 4, 2009 10:39pm]
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