With a budget shortfall looming in future years, lawmakers began setting the stage Monday for a fight over state spending during the 2017 legislative session.
The Joint Legislative Budget Commission, a panel of House and Senate members charged with supervising spending while the Legislature is out of session, approved a long-range financial outlook for the state Monday.
In the coming budget year, which begins July 1, the outlook projects a surplus of just $7.5 million — a tiny sliver of the state spending plan, which is now roughly $82 billion. The following year, a budget gap of $1.3 billion could open up, followed by $1.8 billion the year after that.
Republicans, who have run the state budget process for two decades, quickly zeroed in on a culprit: The state is being wasteful with the money that it has.
“It is 100 percent because of spending. Nothing else,” said incoming House Speaker Richard Corcoran, a Land O’ Lakes Republican who has been budget chief for two years.
Corcoran dismissed suggestions that the $784.9 million in tax cuts and tax holidays that lawmakers have approved over the last three years helped to create the situation the Legislature now faces. Instead, he suggested that reducing state government’s current spending will be the focus.
He specifically highlighted spending on incentives for businesses — something that the House has opposed — and said that in the coming session, the Legislature would likely discuss doing away with Enterprise Florida, the state’s public-private economic development agency.
“I think that we’ve got to move away from spending money on the 1 percent and start spending money on essential services for the people that need it most,” Corcoran said. “Spending money in economic development is a bad idea.”
At the same time, there are already proposals that would pour more money into some areas of the state budget. Incoming Senate President Joe Negron, R-Stuart, has pushed an additional $1 billion for higher education, as well as a plan to use bonds and federal money to boost Everglades restoration.
Corcoran said those ideas were not off the table but would have to be offset with cuts elsewhere.
Democrats, meanwhile, suggested that tax cuts were to blame. Rep. Janet Cruz, who is set to lead the House Democrats next year, issued a statement calling for lawmakers to take a look at those tax cuts before slicing spending.
“Actions have consequences,” Cruz, D-Tampa, said. “The last two years in particular, and for many years before, the majority has made decisions that are costing us now and into the future. Tax breaks that for the most part benefit big business interests mean we won’t have the flexibility to put the people of Florida first.”
The dueling positions suggested a possible return to the budget fights the played out in the Capitol after the financial downturn in 2008. Republicans leaned heavily on spending cuts while Democrats called for measures that would increase revenue. The GOP at the time agreed to increase tobacco taxes and motor-vehicle registration fees, which have since been rolled back, but avoided broad-based tax increases.
There are conclusions in the new long-range financial outlook that could change the potential shortfalls, in some cases dramatically. For example, the outlook assumes some increases in spending on areas like education and health care, projecting those areas to be handled the same as they have been in recent budget years.
The report includes a three-year average of tax cuts and projects similar decisions in the coming session.
It accounts for lawmakers setting aside $1 billion each year to deal with unexpected changes in the economy or additional needs that could crop up. No major changes are expected to that policy because lowering the state’s reserves substantially could make it more expensive to issue bonds to pay for construction needs.
Senate Appropriations Chairman Tom Lee, R-Brandon, noted that state economists will produce two more forecasts of revenues before the Legislature sits down to write the budget next spring. He also said other events, including potential approval of a new gambling agreement with the Seminole Tribe of Florida, could ease the shortfall.
“You could have a gaming compact. You could have some good things that happen,” Lee said.