August 27, 2014

Legislative Preview 2008: Once Again, a Budget Crunch

Will a revenue shortfall prompt changes to Florida's budget and tax system this time?

Cynthia Barnett | 3/1/2008
empty pockets
[Photo: Getty]

Florida’s housing boom gave state lawmakers years of gravy. Windfall tax revenue enabled them to ladle out big expenditures like the $400 million in 2003 to lure the Scripps Research Institute and $310 million to preserve 74,000 acres of the Babcock Ranch in southwest Florida in 2006.

But the collapse of Florida’s housing market and a slowing economy have crimped the flow of revenue into state accounts, stopping those grand, one-time investments. And now, some basics are getting shortchanged, too — social and healthcare services, for example, and the public universities. At Florida State University, the running joke is that cutbacks have so many professors looking to leave that the last one won’t have to turn out the lights — they’ll already be out because the university’s scrimping on power.

Before they even start considering the $70-billion budget Gov. Charlie Crist proposed this January for the 2008-09 fiscal year, state lawmakers will have to debate another round of cuts to the 2007-08 budget that they already trimmed by more than $1 billion last fall. “The budget situation is deteriorating,” House Speaker Marco Rubio told colleagues in a memo about the cuts.

Coming Up Short
Revenue estimates will be less than expected for the next four years:
Fiscal Year
Shortfall*
2007-08
$1.0 billion
2008-09
1.4 billion
2009-10
1.5 billion
2010-11
1.2 billion

*Projected amount of revenue below budget estimates
Source: Florida Legislature’s Office of Economic and Demographic Research

Amy Baker, director of the state’s Office of Economic and Demographic Research, says lawmakers must cut between $400 million and $600 million in recurring spending immediately to help make up shortfalls of more than $1 billion a year over the next four years.

House Budget Committee Chairman Rep. Ray Sansom of Fort Walton Beach recommends cutting $2 billion in recurring expenses from the general fund “if we are going to provide modest levels of funding increases to pay for growth in education, healthcare, public safety and the environment.”

The primary culprit in the budget crunch, of course, is the decline in Florida’s housing market. Fewer home sales have shriveled once-robust collections from documentary stamp taxes and real-estate related intangibles taxes. Doc stamp collections, for example, have dropped from $4 billion in 2005-06 to $2.3 billion this year.

Tags: Politics & Law, Big Bend, Around Florida, Government/Politics & Law, Northwest

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