Florida can expect more potential deficits during the next three budget years, the Legislature’s top economist told a panel of lawmakers from both chambers Thursday.
Amy Baker, coordinator of economic and demographic research, laid out that scenario for the Legislative Budget Commission. It’ll be part of a three-year financial outlook the panel will finalize when it meets again Sept. 15.
Baker said the state has sufficient reserves to cover $285.9 million in unbudgeted needs that now are expected during the current budget year, which runs through June 30.
But lawmakers are facing a potential deficit of $923 million to pay for critical needs, such as expenditures required by the Florida Constitution, court orders and federal law in the next budget year. The gap jumps to $2.6 billion if other high priority needs – those the Legislature has historically funded – are added.
For 2011-12, the budget gap could range from $2.3 billion for critical needs to $5 billion including priority needs. In 2012-13 it could be at least $1.1 billion and as much as $5.2 billion.
“This tells you that it would be a significant stretch to try to get to a budget level that we’re probably more used to seeing,” Baker said.
Florida’s current budget of $66.5 billion is about $5 billion less than the one Gov. Charlie Crist signed into law two years ago. That’s even though it’s fortified with $5.3 billion in federal stimulus money.
The state expects to have a similar amount of stimulus in next year’s budget, but it won’t be there the following year. That’s one reason why Baker is projecting budget gaps even though state revenues are expected to begin growing again next year. That’s after they have fallen for three straight years.
Most of the current-year, over-budget spending is in the state-federal Medicaid program — $225 million. The Voluntary Pre-kindergarten program needs $17.5 million more because enrollment has topped expectations while the Principal State School Trust Fund is facing a $38 million shortfall.
The state’s Risk Management Trust Fund also is short by $5.3 million due mainly to an unusually large settlement last month. The state agreed to pay nearly $4 million to two children for keeping them in a Hernando County home where they had been abused and starved by their foster parents.
The state can dip into reserves to cover those current-year needs and still have a $381.4 million cushion, Baker said.
Next year, though, the state is facing a $2.8 billion increase in critical needs that revenue growth will only partly offset, Baker said.
They include $515 million in additional general revenue for public schools to make up for a drop in property tax receipts and $1.6 billion for Medicaid to cover additional patients and make up for a falloff in federal stimulus money.
Baker’s forecast for other high priority needs next year totals $1.7 billion. It includes $498.5 million to increase public school spending by 2.87 percent per student and $250 million for aged, disabled and medically needy patients not covered by the basic Medicaid program.
“We always expected it was going to be a difficult and challenging budget year,” said Rep. David Rivera, a Miami Republican who chairs the commission. “You can expect the Florida Legislature to live within its means.”
In 2011-12, the state’s critical needs will include $1.2 billion for public schools to replace stimulus money they’ll be losing and another $1.1 billion for Medicaid.
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This is a huge difference, what is roughly the estimation when we could level the budget. This is recession factor, which affects the budget of Florida.
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