Surplus shows the state has spent their money wisely
Florida lawmakers adopted a new long-range financial forecast on Friday that could bode well when they meet next spring to write a new state budget.
The financial outlook, which was adopted unanimously by the Legislative Budget Commission, projects a $223 million surplus for the next budget year, which begins July 1. It is a modest surplus, representing only 0.6 percent of the estimated $34.6 billion in general revenue projected for next year.
Senate Appropriations Chairman Rob Bradley, R-Fleming Island, who chairs the joint budget panel of House and Senate members, said the positive numbers are a sign of Florida’s strong economy and the “conservative financial decisions” made by lawmakers.
“We’re pleased to see we will have a modest budget surplus going forward to next year and we’re very pleased to see the strong economy that is shown in the data,” Bradley said. “Things are really moving in the right direction. Florida is on a roll.”
Sen. Bill Galvano, a Bradenton Republican who takes over as Senate president in November, also noted that last year’s forecast, which makes projections over a three-year period, had shown a potential revenue shortfall of more than $1.1 billion in 2019-20, in contrast with the new positive projection.
Amy Baker, head of the Legislature’s Office of Economic and Demographic Research, which oversees the preparation of the annual forecast, outlined a series of indicators — including a 1.45 percent annual population increase, a low unemployment rate and a job-growth rate above the national average — showing the strength of the state economy.
Baker said a key element in the state’s economy is the strong tourism sector, which accounted for about 13 percent of the state’s largest revenue source — sale tax collections — in 2016-17. She said the strength of that sector has helped offset some elements of the economy that have not fully recovered, including the construction industry.
But she also added a note of caution, saying the influx of tourists could be influenced by things such as the state’s current struggle with toxic algae and red tide, which are impacting at least 14 coastal counties.
If revenues dip, the forecast shows the state budget has strong reserves, with nearly $3.5 billion in unspent funds in the current budget.
While a small surplus is projected in 2019-20, the forecast also shows a revenue shortfall of $48 million in 2020-21, growing to $457 million in the third year.
Baker said one factor that could boost state revenue in the budget process would be using the full annual increase in local school property taxes, known as the “required local effort.” It could generate more than $900 million over the three-year period, she said.
The House and Senate have differed over the use of those funds in recent budget negotiations, with the current agreement restricting the increase to new construction.
Bradley said the Senate will continue to advocate keeping the tax rate frozen but using property tax increases based on new construction as well as increases in property values.
“It’s not a tax increase. We’ve plowed this ground before. And I look forward to having those discussions (with the House),” Bradley said.
Lawmakers will pass a new state budget in their 2019 session that begins in March. The current budget is just under $90 billion.