Politics

State looks for trims as coffers run short

Tax collections are down and may lead to a $1.2-billion shortfall.

By STEVE BOUSQUET
Published June 29, 2007

TALLAHASSEE - Florida's deepening slump in tax collections will force the state to welcome a new fiscal year this weekend with cost-cutting steps such as reducing travel and leaving vacant jobs unfilled, Gov. Charlie Crist said Thursday.

A new report by state revenue forecasters shows net revenue through May is $318-million less than anticipated. If the trend continues, forecasters say, the shortfall in the fiscal 2008 budget will grow to more than $1.2-billion.

"We have to be disciplined about what these forecasts are showing, and make sure that we're prepared to provide the services that are necessary within the dollars coming into the state treasury, " Crist said.

The new numbers, while not a total surprise, could force state legislators to convene a special session as early as September to consider deeper cuts in the new $71-billion budget.

If deeper cuts are required, it would make it much more difficult for legislators to keep their promise to find $7-billion over the next four years to protect public schools from the effects of a proposed property tax break for homeowners.

The steady dropoff in tax collections has spread beyond the 6 percent sales tax, the state's primary source of revenue, to include corporate income tax, insurance premium tax and other levies that support state government.

In addition, documentary stamp taxes collections through May were 54 percent below the same period for last year, reflecting a continuing recession in the real estate industry.

The governor's chief of staff, George LeMieux, said a directive would be sent to all state agencies as early as today, advising them to search for "efficiencies, " including limiting travel and other discretionary spending, leaving nonessential jobs vacant and postponing major purchases.

"We have to be prudent and tighten our belts, " LeMieux said.

Another possible step, which has been taken during previous budget crunches, is a mandatory 5 or 10 percent "holdback, " which would force agencies to curtail spending to a specific level below what is in the state budget.

Nearly two-thirds of the state budget is in two main areas: health and human services and public education.

Senate President Ken Pruitt, R-Port St. Lucie, said Thursday that it was much too soon to say whether a special session on the budget would be needed.

"It's not like it was unexpected, and it's no different than what families are going through, " said Pruitt, who spoke with Crist on Thursday at a bill-signing ceremony. "That's why it's important to cut taxes."

Crist has already said a special session in the early fall is possible to take up the future of no-fault car insurance and changes to KidCare, a health insurance program.

Crist socked a little more money away last month when he vetoed $459-million in discretionary spending by legislators. He emphasized that the slide in tax collections underscores the need to reduce property taxes as soon as possible.

Steve Bousquet can be reached at bousquet@sptimes.com or 850 224-7263.

[Last modified June 29, 2007, 00:46:08]