New Tax Forecast Could Pose Problems For Scott

January 20, 2016

Economic forecasters Tuesday slashed nearly $400 million from their estimate of how much lawmakers will have to spend in the budget year that begins July 1, increasing questions about Gov. Rick Scott’s plans to cut taxes and boost economic-development incentives.

With tax revenues lagging over the next 18 months and other slight adjustments to the budget, the Legislature will be working with $395.6 million less than economists predicted in October. Overall, the state’s income will still increase by $1.2 billion over the current budget year, which ends June 30.

But given the normal growth in funding for programs like public education — which all sides have promised to boost to record levels — the reduced total for lawmakers will likely put more pressure on Scott’s push for $1 billion in tax cuts and increased spending on incentives used to lure businesses to Florida.

In a statement issued after the new forecast, Scott spokeswoman Jackie Schutz called the $388.5 million drop in tax revenues “a minor reduction” and said the governor still backed his tax cut plan. The remainder of the $395.6 million forecast reduction stems from budget tweaks. Schutz also said that a proposed gambling agreement with the Seminole Tribe would bring in $2.3 billion over eight years. While that funding wouldn’t be available until after the coming budget year, it could soften the tax cuts’ impact on future spending plans.

“We are pleased to also learn that we still have a significant increase in revenues of over $1 billion in fiscal year 2016-17,” Schutz said. “Additionally, most actual revenues end up higher than revenue estimates.”

Legislative leaders, though, were more cautious about the new numbers. House Speaker Steve Crisafulli, R-Merritt Island, said the revised estimates “remind us that we continue to be in recovery, but we are certainly still bouncing back from the unprecedented recession.”

“Fortunately, we have instituted conservative budgeting principles year after year,” Crisafulli added. “We will be able to make adjustments to our spending plan which will come out in the next few weeks.”

While both Crisafulli and Senate President Andy Gardiner, R-Orlando, have pledged to cut taxes, the House has been more welcoming to Scott’s talk of a larger package. House leaders said last week that they would try to meet the governor’s goal of $1 billion.

Gardiner did not back away from the promise of tax reductions in a statement issued after the new forecast, but emphasized other needs as well.

“Our goal in drafting the Senate budget is to prioritize funding to care for the most vulnerable and other programmatic structural needs of our state,” Gardiner said. “We are also working to strike a balance that reconciles our desire to enhance broad-based tax relief, economic development and other pro-growth policies with our responsibility to set aside ample reserves that allow our state to respond to the potential for continued instability in other economies.”

Driving the softening of the state’s numbers is a projected falloff in corporate income taxes. Economists estimated that Florida would bring in $240.2 million less than previously expected in the current budget year and $257.6 million next year. Meanwhile, the income from sales taxes and insurance premium taxes would increase.

Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research, said corporate profits were expected to slow across the country as weakening economic activity overseas made exports a harder sell.

by Brandon Larrabee, The News Service of Florida

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Written by William Reynolds · Filed Under News