State downshifts on revenue estimate
By ASOCIATED PRESS
Published March 13, 2007
TALLAHASSEE - Florida's shaky financial outlook took a turn for the worse Monday when state economists knocked nearly $1-billion out of their two-year revenue estimate for the current annual budget and the next one, which takes effect July 1.
The present budget year will be Florida's first with a decline in general revenue from the previous year since 1974-75, said Amy Baker, coordinator of the Legislature's Office of Economic and Demographic Research.
The declines since the last revenue estimate in November are due mainly to a cooling off of Florida's recently booming housing market, Baker said.
"We were so high last year that it's just not sustainable," she said. "So it doesn't reflect economic weakness. It reflects the fact that when you have those extraordinary peaks, you can't keep going at that speed."
The reductions will be partly offset by good news from the state-federal Medicaid program, which provides health and nursing home services for the poor and some elderly.
A recently revised forecast says the state will have a $566-million surplus - $191-million more than previously estimated - in its current year share because fewer patients than expected have needed Medicaid services.
Lawmakers will use the revised estimates to draft the 2007-08 state budget.
House Speaker Marco Rubio, R-West Miami, said the Legislature held down spending over the past two years and put money in reserve because lawmakers had anticipated the decline.
Economists for the Legislature, governor's office and Revenue Department estimated the state will collect $303.4-million less in general revenue this budget year than the November estimate. They cut their estimate by $652.9-million for the 2007-08 budget year, for a two-year total reduction of $956.3-million.
Due to other financial factors, including carry-overs, the bottom line is that lawmakers will have $30.9-billion in general revenue available to appropriate - $1.2-billion less than they started with last year.
General revenue, drawn mostly from sales tax, represents less than half of the budget but lawmakers have discretion over how to spend it. The rest of the budget is trust fund money committed to specific purposes such as fuel taxes for road building.
The decline in housing means less money is coming in from sales tax and the documentary stamp tax assessed on deeds, bonds, mortgages and other borrowing instruments.
The continuing strength of the state's overall economy is one reason why Medicaid expenses are going down, Baker said. A constitutional amendment that increased Florida's minimum wage above the national level and a very low unemployment rate - 3.3 percent for the past three months - are other factors, she said.
Florida appears to be returning to normal after four years of rapidly increasing revenue, Baker said. Some of that increase resulted from consumer and insurance spending to repair and replace buildings and vehicles damaged or destroyed by a series of hurricanes.