TALLAHASSEE, Fla. (AP) - The push by Florida lawmakers and Gov. Rick Scott to make deep spending cuts this year may pay off during the crucial 2012 election season.
A new forecast released Wednesday by state economists shows that the state may have enough money next year to meet its needs for public schools and the safety-net health care program known as Medicaid while at the same time setting aside $1 billion for reserves.
This is a big turnaround from recent years when legislators have staggered into their annual legislative sessions confronted with daunting budget shortfalls. This past year the initial shortfall was nearly $4 billion. Lawmakers wound up balancing the $69 billion state budget by laying off state workers, slashing money for hospitals and forcing public employees to pay 3 percent of their salaries to cover part of their pension costs.
Those steps have put the state into a better financial position heading into next year and could let the Republican-controlled Legislature avoid having to exact another round of cuts just months before voters head to the polls.
But this good news may just be short-lived.
While state economists right now predict a small budget surplus of nearly $300 million it may soon get wiped away. Economists note that their new forecast is shaky because a certain amount of growth over the next year could be undermined by recent economic woes.
"I am cautiously optimistic," said Rep. Denise Grimsley, R-Sebring and the House budget chief. "The plan shows us in the black over the next three years, but the next estimate may show a downturn....so I wouldn't take the revenues to the bank just yet. I don't anticipate facing what we have in past years though."
Amy Baker, the head of the state's Office of Economic and Demographic Research who worked on the forecast called it "good news." But she added that it "comes with a very strong risk and a very strong warning."
Baker said that while tax collections during the year have been on target there are signs that will likely change. Florida's budget relies primarily on a variety of taxes, especially the state's sales tax that itself rises and falls based on consumer spending. There have been fears that the country could be headed into another recession.
"It is a virtual certainty that we will be changing the estimate downward," Baker said.
Any serious change in the state's financial outlook could also force another tug-of-war between Scott and state lawmakers.
Scott came into office pledging deep tax cuts, including the eventual elimination of the state's corporate income tax. Lawmakers this past year only passed a small $30 million cut in the tax that generates nearly $2 billion in revenue.
Florida's constitution requires that each fall that state economists draw up a three-year financial outlook that looks at spending and tax revenues. This is the first time in the five years since economists started doing the forecast that they have not projected a budget shortfall at some point. A state legislative panel will be asked to sign off on the new forecast next week.
Lawmakers will convene in January for their annual session where one of their main jobs will be to draw up the 2012 budget. Scott and state legislators - in anticipation of the possible need for more budget cuts - have already asked that state agencies turn in by September detailed proposals that show 10 percent budget cuts.
A spokeswoman for House Speaker Dean Cannon has downplayed the request and said the request does not mean that legislators will actually cut 10 percent but that the information will be used to prepare next year's budget.