State: State gets more gloomy budget news

State financial experts shaved $232-million off their predictions Friday for state revenue in 2003-04, a sign that the economy is not rebounding as quickly as once hoped.

Yet legislators who will cope with slumping revenues and rising costs when they write a $50-billion state budget next spring were not entirely glum.

"The figures could have been a lot worse," said incoming Senate President Jim King, R-Jacksonville.

The main reason for the lower revenue projections is the state sales tax, Florida's major source of revenue. The state's financial experts concluded the sales tax, a reliable gauge of retail activity, will not bring in as much money next year as once hoped.

The overall revenue projections would be even lower if not for healthy corporate and real estate tax collections, experts said.

The combination of reduced revenue, growth and several constitutional mandates, including the class-size amendment, has many in Tallahassee wondering if a tax increase is inevitable. Even Gov. Jeb Bush, who opposes tax increases and backed record tax cuts in his first term, has said "all bets are off" when it comes to paying for the class-size amendment. The estimated cost of that amendment, approved by voters last week, reaches up to $27-billion over eight years.

According to Friday's estimates, Florida can expect $802-million more in general revenue, the all-purpose money that can be spent on anything. That's down from the $1.1-billion state economists had predicted in March.

But the bulk of that general revenue could be swallowed by the growth in state services before lawmakers can even think about paying for expensive constitutional amendments voters passed. Some 65,000 new students are expected in Florida schools next year, costing the state an estimated $330-million.

Another $300-million will be needed for the state to keep up with rising medical costs for Medicaid recipients. And that figure does not include the cost of reinstating several programs -- such as eyeglasses for the poor -- that the Legislature cut this year but hoped to restore.

"I think they are going to make those cuts permanent," predicted Rep. Ron Greenstein, the Coconut Creek Democrat who tracks the budget for his party.

The new revenue estimates Friday had Florida Democratic Party Chairman Bob Poe challenging Bush to identify the tax he will raise to balance the budget and make up for revenue lost to recent Republican tax breaks.

"Friday's revenue estimate shows the state even deeper in a fiscal hole. What is the governor's specific and detailed plan to meet Florida's growing needs and balance the state's budget," Poe asked. "Will it be higher sales taxes? Higher property taxes? A new state income tax? Tell the truth, Jeb. How can you pay for it?"

During his re-election campaign, Bush boasted of the $4-billion in taxes he has cut since taking office. That's enough to pay for the first-year cost of the class-size initiative that Bush said Florida couldn't afford.

Bush said earlier this week he would consider raising money by permitting more gambling before he would consider a tax increase.

"I'm not shutting out any options," Bush said. He said he was still against any new gambling as a way of raising more tax revenue, but said it may be the least of three evils.

Incoming House Speaker Johnnie Byrd repeated Friday his desire to see the state spend only what it raises now.

"Today's revenue estimate shows that while we're doing better than expected, we still have to make the tough choices if we are to live within our means," he said. "But making tough choices is what Florida citizens want us to do."

And there will be plenty of tough choices.

In addition to growth and the class-size limit, lawmakers have to find a way to pay for several big ticket items that come due this year: the first installment of the high-speed rail voters approved in 2000, additional state court costs and free pre-kindergarten to any 4-year-old whose parents want it. Those three items will cost more than $1-billion.

"We have been preparing all summer for a potentially tight budget year," King said.

Friday's predictions are not the final word on next year's revenues, but they will be used as a guideline by Bush as he prepares his budget recommendation. State economists are scheduled to meet again in March and, if necessary, revise their predictions again before the Legislature drafts a budget.

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Lucy Morgan

From the Times state desk