What you need to know about Florida's financial future

A relatively-obscure arm of the Florida Legislature will give its final blessing to a 3-year long range financial outlook on Tuesday. This document is much better at analyzing the state's financial future because it does more than rely on estimates of how much sales tax money will come in during the coming year. Instead it attempts to put a pricetag on all the expected future costs while also trying to predict how much money the state will receive.

The Legislative Budget Commission heard a presentation about this outlook earlier this month, but today this panel of legislators must adopt the actual findings.

Here's the most important details to remember:

* Depending on what lawmakers decide to keep funding, the budget shortfall runs anywhere from $4.3 billion to $13.3 billion over the next three years. Translation: This could increase the pressure to adopt a gaming compact as well as keep intact recently-enacted fee hikes such as those for driver licenses and tags. It also means lawmakers could be in another rough session in 2010 because election year politics will collide with financial reality. And the problem gets even worse in 2011 when the federal stimulus money runs out.

* Part of the shortfall is caused by needs in education. An estimated $1.4 billion is needed to maintain per-student funding levels. This number DOES NOT include any funding in the 2010-11 year for class size reduction. Additionally, lottery revenue is not growing fast enough to keep up with continued demands caused by programs such as the Bright Futures scholarship program that picks up college tuition costs for students who did well in high school. Bright Future expenses are expected to rise 14 percent alone in 2010-11. The increased cost is pegged primarily to higher tuition rates over the next three years.

* Roughly $3 billion will be needed in Medicaid. Part of this need is driven by the fact that federal stimulus dollars that bulked up Medicaid will cease by the end of 2010. Additionally, the shortfall reflects the presumption that state lawmakers will continue the Medically Needy and a medicine program for the aged and disabled past 2010. Both programs under current law are due to expire at the end of next year.

* More than $1 billion will be needed over the next three years for the state's prison system.

* About $326 million will be owed to the federal government to cover interest payments for unemployment insurance costs. The state's unemployment fund required a federal loan this year. While there is no interest on the loan today, the U.S. government will start charging interest in 2011.

* More than $1 billion will be needed for state employee pay and benefits package if state lawmakers want to keep the Florida Retirement System actuarially sound. The projections show that $372 million will be needed during the 2010-11 budget year just for the pension plan. The increased cost also assumes a pay hike for state workers that mirrors inflation. Costs associated with health insurance are based on the premise that BOTH the state and employees will pay higher premiums - and that the nearly 30,000 state workers (and legislators) will continue to receive their health insurance for free.

* Despite the fact that the state requires a "balanced budget" every year, the amount of debt continues to mount. In the last 10 years alone, the state's debt has gone from $15.4 billion to $24.3 billion. It is expected to reach nearly $29 billion by 2014. The annual payments on that debt are nearly $2 billion a year.

 

Comments

[John D]

Why complicate everything? Just raise the sales tax $.01.

[Tally]

Thanks for another great post. It will be fun to see how the Republicans deal with this.

[Tally]

Thanks for another great post. It will be fun to see how the Republicans deal with this.

[T. Berry]

Here's guessing how the state GOP handles this: blame the fed, blame the opposition, blame socialism, blame taxes, blame communism, blame China, blame India, and.....#1: Blame Obama.

Will they accept accountability? Or blame the previous executive administration for allowing banks to bypass federal bank regulations, thus contributing greatly to the housing collapse that killed Florida? Cutthroat capitalism? The years of spending surge and simultaneous tax breaks?

We'll see which path they take. My best educated guess from the two past decades of Florida GOP rule is the former rather than the ladder. Good luck and God bless! We need it!