Florida Tax Projections Increase Slightly Amid Budget Questions

March 16, 2015

Lawmakers facing the pressures of a potential loss in federal health-care funding on one side and Gov. Rick Scott’s drive to slash taxes and raise education spending on the other got little relief as state economists projected how much money the Legislature has to work with.

Economic forecasters added $145.4 million in tax revenue for the budget year that begins July 1, a change that represents just 0.5 percent of general revenue. General revenue, in turn, pays for less than half of the spending plan that lawmakers will put together.

The forecasters also revised this year’s revenues up by a tiny $500,000 — money that could be carried over to next year.

Amy Baker, the Legislature’s chief economist, said the changes aren’t significant enough to alter lawmakers’ plans.

“I would say $145 million is not going to change what their thinking was going into this morning about the development of their budget,” Baker said. “It’s a very marginal change. … In terms of what they were looking at this morning, they’re probably looking at the same thing this afternoon, and it’s not going to change any decision that they’re facing.”

In fact, shortly after the meeting of economists broke up, Senate President Andy Gardiner issued a statement contrasting the increased revenue with “the stark reality” of a budget that will begin to take shape next week.

“Our appropriations chairs and their committee staff work on the budget all year long, but this is the week where we have to put pen to paper,” said Gardiner, R-Orlando. “When faced with that reality, any increase in general revenue, no matter how modest, is positive news.”

But Gardiner also highlighted ongoing negotiations between state and federal officials about a health-care funding program set to expire June 30. If no agreement is reached, it could blow a $2 billion hole in the state spending plan.

“With seven weeks to go (in the legislative session), I am hopeful Tallahassee and Washington can reach a solution that will allow our state to utilize increases in general revenue to advance important policy goals in areas like education, tax relief and water and natural resources, rather than to make up for lost federal funding; however, I will not ask senators to vote on a budget that includes promises of substantial funding we may not be able to keep,” Gardiner said.

Tuesday’s meeting capped off a series of gatherings on state finance that produced a few minor changes. For example, insurance premium tax revenue will not rise as quickly as initially expected under the Affordable Care Act, the health-care law commonly referred to as Obamacare. And while projections still call for costs going down in Medicaid in the coming budget year, the newest forecast predicts smaller savings than were anticipated.

Lawmakers still appear to have a surplus of about $1 billion to work with. But between the health-care showdown, Scott’s call for record per-student spending in education and conservative hopes for tax cuts of $500 million or more, that funding could dry up quickly.

As for the economy itself, Baker said the fact that growth is on an even keel is an encouraging sign.

“It’s very stable growth, which is a positive,” she said. “After 10 years of wild roller-coaster changes up and down, this is really good to see.”

by Brandon Larrabee, The News Service of Florida

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Written by William Reynolds · Filed Under News