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Tax shortfalls crimp budget

State’s third straight drop undercuts Crist’s plans.

Published February 9, 2007


TALLAHASSEE — Florida tax collections have fallen short of projections for the third straight month, prompting Gov. Charlie Crist and legislators to rethink spending plans for next year.

State taxes and fees collected were $108-million short of projections for January. That’s on top of a revenue snapshot in November that was $466-million below the expected figure.

For state officials, that is ample evidence of a tamped-down economy that could mean fewer new programs and services. It’s still too soon to tell.

“I certainly would have preferred a more rosy forecast,” Jerry McDaniel, Crist’s budget director, told lawmakers Friday. “We are now starting to prepare options as to what we might do to deal with that.”

As a cushion, Crist is keeping more than $2-billion in cash on hand that could backfill a continuing drop in tax receipts. But that money is there for other emergencies, too.

Crist’s proposed budget of $71.2-billion is $2.4-billion less than the current year but that’s largely the result of spending spikes in the current budget for transportation, land purchases and insurance relief.

Crist wants lawmakers to spend more for class size reduction, prison beds, teacher bonuses, stem cell research, a crackdown on probation violators, movie and TV production incentives and new voting machines.

Most of the projected revenue shortfall is in sales taxes, the largest source of state revenue. Another area of sluggishness is in taxes on real estate transactions, known as documentary stamps — further evidence of a slowdown in the once-sizzling Florida real estate market.

The slump is no surprise to economists and retail industry experts. Sales of taxable construction materials, home improvements and furniture have all been down since late summer because of a housing slump.

“It’s all related to housing,” said Randy Miller, executive vice president of the Florida Retail Federation. “But after years of double-digit increases in tax collections, we’re not that concerned.”

January and February tax collections came during a holiday gift buying season that was better than 2006 for retailers, but not by much. Home builders are still cutting payrolls until demand catches up with their overbuilt inventory.

“There’s no recession, but retail sales will be weaker the rest of this year until the overbuilt inventory in housing is dealt with,” said Stan Geberer, a senior economist with Fishkind & Associates in Orlando. “We’re really just getting back to normal.”

The month-to-month revenue estimates are especially critical this time of year as the governor and Legislature begin to assemble the state budget for the fiscal year starting July 1.

They must comply with a constitutional requirement that the budget be balanced, and the balancing act is closely tied to the revenue forecast.

In addition, lawmakers are further constrained by a 3 percent cap on the amount of unexpected money that can be spent for ongoing, year-to-year programs.

“This is the worst-case scenario,” said Rep. Ray Sansom, R-Destin, the leading budget writer in the House. “But if it continues this way, state government’s going to look the same next year as it did this year.”

Steve Bousquet can be reached at or (850) 224-7263.

[Last modified February 9, 2007, 21:04:07]

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