The Legislature’s chief economist has told lawmakers that next year’s relatively tiny budget surplus will be erased because of costs from Hurricane Irma.
She explained that extra costs to the state from last year’s hurricanes, Hermine and Matthew, cost $76.2 million, meaning a projected $52 million surplus for fiscal year 2018-19 is “gone.”
Not that that was much to begin with for a state budget that’s roughly $83 billion.
When state Rep. Bill Hager, a Delray Beach Republican, asked Baker for a 1-sentence summary on Irma’s effect on Florida’s finances, she answered: “It’s going to make fiscal year 2018-19, which was bearable, much worse.”
But state Sen. Bill Galvano, a Bradenton Republican slated to become Senate President in 2018-20, said the current outlook was “not based on present day affairs … and based on dubious assumptions.”
“It’s not a surprise where we are going in terms of deficits,” he later told reporters. “But there’s a lot more digging (to be done) to have an accurate number.”
In other highlights, Baker said:
— The state’s overall economy has returned to normal, with the “caveat” that construction is lagging behind. Tourism, however, is growing, with 119 million visitors last year. That’s good, because the financial outlook depends on 4.5 percent growth per year in tourism, which rebounds quickly from “adverse” events like hurricanes.
— The state’s gambling settlement with the Seminole Tribe over blackjack also allowed $550 million to be released into state coffers for next fiscal year, which runs July 1-June 30.
— Moreover, “our state reserves are strong,” mentioning $3.6 billion in safekeeping. But of that, only $1.46 billion is available to gird the books.
— PreK-12 education funding is a “significant” problem in part because of growing student enrollment, making that cost “right behind” Medicaid.
— Hurricane Irma is what economic forecasters call a “black swan”—something that has a low probability of happening, but if it does, it has great financial impact. And state programs that provide relief, or are otherwise related to emergency response, will affect revenue estimates.
— Lawmakers can do a easy fix of sweeping some trust fund money into general revenue, but some funds can’t be swept for legal reasons. Ultimately, legislators will need to address the “structural imbalance” in revenue and expenses in future years.
Galvano was asked if the state’s money troubles will affect Gov. Rick Scott‘s and the Republican-controlled Legislature’s continued appetite for tax cuts.
“What was built in (this year) was $90 million,” he said. “I think you can’t just assume you can hit that number or a different number just because we’ve done it in the past … That issue needs to be examined as well.”