State economists increased projected tax revenues slightly at a meeting Friday, but the small increase is unlikely to significantly change the outlook for legislative budget negotiations that will soon begin in earnest, reports Brandon Larrabee of the News Service of Florida.
Forecasters added $153 million in tax revenues in the budget year that ends June 30, and $106.5 million for the year that begins July 1. Lawmakers are set to begin work soon on the budget for the coming year, with the chairman of the Senate Appropriations Committee saying allocations for different sections of the spending plan should be out early next week.
In all, lawmakers will have more than $3.5 billion more to work with this year than last. Even taking into account likely policy decisions and budget increases, the state could have a surplus of $1.1 billion.
Economists worked during the meeting, which ran late into the evening, to balance two forces at work on Florida tax revenues pushing in opposite directions. On one hand, the state’s slow-moving economic recovery seems to be picking up steam. But two actions by the federal government — the reversal of a payroll tax cut that expired during the “fiscal cliff” negotiations and a series of across-the-board spending cuts called the “sequester” — threaten to slow that growth.
Amy Baker, coordinator for the Legislature’s Office of Economic and Demographic Research, said the federal moves were unlikely to completely undermine the state’s recovery, but could cut into the improvement.
“If it were not for the effects of the fiscal cliff that are just starting to hit and effects from the sequester, it would have been a very rosy outlook,” Baker said. “We would have been adding even more money than we’re adding. … But it was definitely dampened by what we think is ahead of us.”
Lawmakers have been careful about the revenue estimates to this point, even though they show the state able to handle most of its expected budget needs without reductions for the first time in several years. That approach is likely to continue.
“Today the conference made some small adjustments caused by the sequestration, however they noted that more changes will be needed when we know more about Congressional action,” Senate President Don Gaetz, R-Niceville, said in a statement issued by his office. “This uncertainty, caused by a lack of leadership in Washington, highlights Florida’s need to plan ahead, be cautious and to maintain adequate reserves.”
Senate Appropriations Chairman Joe Negron, R-Stuart, echoed those comments in an interview Friday. He said allocations would likely be issued early next week following the revenue numbers.
“I’m still pursuing a cautious and prudent course as we build our state budget,” Negron said.
In part, Negron said, it’s still unclear how much the sequester will affect state revenues. The cuts are split between domestic programs and military spending, and officials are particularly worried about how the cuts could affect Florida’s military bases and defense contractors.
“I don’t think we have a complete grasp on the possible deleterious effects on Florida’s economy,” Negron said.