Legislative leaders in Tallahassee applauded the news earlier this month that there is likely to be a $635 million budget surplus going into 2016. Senate President Andy Gardiner said the surplus will allow for the Legislature to increase per student funding for schools, as well as provide up to a $250 million tax cut.
But Florida Tax Watch is already raining on the parade, warning lawmakers that they likely will face a deficit if they spend all of the surplus next year.
“There will still be intense competition for funding in the next year,” said Kurt Wenner, vice president for research at Florida Tax Watch. “Just as state revenue is climbing, demand for services is also increasing. State economists have predicted $1.6 billion for increased needs next year, ranging from education to health services.”
The Tallahassee group’s just released report says that The Long Range Financial Outlook assumes a General Reserve of only $1 billion, the smallest reserve in the past five years. “Any reserve larger than $1 billion would reduce the surplus,” they note.
(The Long Range Financial Outlook is constitutionally-required report produced annually by the legislative Office of Economic and Demographic Research and the House and Senate Appropriations Committee.)
Tax Watch also reports that if any of the surplus is spent on what is known as recurring appropriations, there is a compounding effect on future years because less money is carried forward into the next and the recurring budget base is larger. They say that means that the Legislature can only spend $74.0 million of that on recurring programs without creating a deficit in the third year. “This may be another incentive for legislators to leave some of the FY2016-17 surplus in reserve,” they write.
