State forecasters added nearly $400 million to estimated tax revenues over the next year and a half — but warned that dangers like the “fiscal cliff” could still damage a fragile economic recovery powering the gains, reports Brandon Larrabee of the News Service of Florida.
Overall, the money added to the forecasts Friday does not substantially change the picture Gov. Rick Scott faces as he sits down to craft a budget for the coming fiscal year, which begins July 1. Of the $391.7 million that forecasters added, $236 million comes in the current spending year. Forecasters added $155.7 million to 2013-14.
Those numbers are a relatively small share of the nearly $28.3 billion in general revenue that Scott will have at his disposal. More than $2.5 billion of that is one-time money, including the $236 million in the current budget year, which will roll forward.
Still, the numbers bring the state’s projected budget surplus to almost $829 million. Lawmakers have been cautious about the surplus estimate, in part because of a mix of federal budget cuts and tax increases set to kick in Jan. 1 if President Barack Obama and Congress can’t strike an agreement to avoid going over the so-called fiscal cliff.
Forecasters made it clear that the fiscal cliff still posed a risk to the state that was largely unacknowledged in the new estimate. Amy Baker, the state’s chief economist, said consumer confidence numbers that help drive spending were already weakening.
“Really, I think what the fiscal cliff did to our estimate today is keep us from adding more money,” Baker said.
Given the uncertainty surrounding the negotiations between Obama and Congress, forecasters struggled to decide how much to factor in from the cliff and the potential drop in consumer demand. Baker said it was vaguely similar to the dive the confidence measure took during the height of the debt-ceiling standoff in August 2011, though she said the effect was smaller so far.
“I think it’s not theoretical,” she said. “I think it is starting to creep into our data.”
But Don Langston, an economist with the House, said a drop in consumer confidence doesn’t necessarily mean a noticeable drop in sales — and the tax revenues they generate — is coming.
“I’m not saying it’s irrelevant,” he said. “I’m just saying don’t overreact to it.”
Other risks also remain, including those from slow recoveries or recessions in many European countries, which could spill over into the U.S. economy. And lawmakers are still watching the Florida Supreme Court, which is expected to soon issue a ruling on a 2011 law overhauling the pension plan for state employees. If the state were to lose that case, it could wreak havoc on the budget.