Late last week, the official estimates of general fund revenue collections in Florida during each of the next two years were reduced by 7% and 8%, respectively. For the current fiscal year, this means that the state is expected to have $1.8 billion less in funds than was thought in March. Slowing sales tax collections are the primary culprit.
Raising taxes to help fill this shortfall appears to be completely out of the question. The likely solution will involve some combination of:
-Relying on the $300 million the legislature set aside last year.
-Making permanent Governor Crist's order to cut state agency budgets by 4%, saving up to $1 billion.
-Tapping into reserves contained in the hurricane recovery fund (apparently ignoring the potential costs of Tropical Storm Fay) and health care endowment, which have about $1.6 billion available.
Lawmakers could, of course, also convene in a special legislative session to make the needed adjustments, though election-year politics make that option extremely unlikely.
Perhaps more important than how Florida will fix its budget this year, however, is how it will address the inevitable shortfall looming next year. State economists are projecting revenues to be $2.2 billion lower than was originally thought. Tapping into reserves this year will only reduce the number of options available next year, and with cuts in vital programs already having gone quite deep, that option will undoubtedly be even more painful next year. Perhaps the dire situation on the ground in Florida will eventually begin to loosen the seemingly unshakeable grip of anti-tax advocates in the state. On a somewhat encouraging note, the Orlando Sentinel this week even ran an editorial suggesting something previously unheard of in Florida... an income tax!