Florida legislators face a shortfall of almost $2 billion for the next fiscal year, a number that could rise as the global economic crisis worsens, the state chief economist said Thursday.
Amy Baker, director of the Legislatures Office of Economic and Demographic Research, told the Senate Budget Committee numbers could change greatly between now and the start of the 60-day legislative session in January, depending on consumer confidence levels and Europe's handling of its debt crisis.
Our forecast is assuming there is no second recession, Baker said. This is achievable if there are no other shocks.
She added that mainstream economists are 50-50 that a second recession will occur.
New numbers indicate the state will have $1.96 billion less in the next budget year than the current year that ends June 30, if all revenue and expenses remain unchanged. Projections also show the shortfall would be $888.8 million in 2013 and $787 million in 2014.
Sen. J.D. Alexander, R-Lake Wales, said he remains nervous as the state numbers dont appear as pessimistic as they could be, since consumer confidence is easily shaken.
We need to be careful and realistic, said Alexander, who chairs the Budget Committee.I think with folks' uneasiness you can have pretty big swings in consumer sentiment on spending and, therefore, our revenues.
Prior to the committee meeting, Sen. President Mike Haridopolos, R-Merritt Island, said he expects the numbers to get worse.
After the budget battle in Washington, confidence has fallen off. Weve seen spending patterns have not improved, Haridopolos said.
He added that businesses are not hiring because of uncertainty out of Washington in areas such as the health-care overhaul.
I want to make sure we get this budget right this spring so we dont have to come back in the summer or fall, he said.
Planning for a bigger shortfall could mean more lean times for state employees, he said.
"Everything is on the table," he added.
When the summer began, the forecast was for the state to be able to roll a potential $273.8 million surplus into the following budget year.
Last week, state economists reported sales taxes are projected to be down $267.1 million in the current year, with the overall budget shortfall for next year to be at least $1.3 billion.
The larger number is due to the addition of projected Medicaid and health care costs.
The outlook has taken a dramatic turn in the past few months, blamed in part on the problems in the Eurozone, the debt ceiling debate and the nations Standard and Poors downgrade.
The numbers also face uncertainty in how the market reacts to Congresss joint select committee on deficit reduction -- known as the "supercommittee."
The committee has deadlines of Nov. 23 to come up with a plan to reduce federal spending by $1.5 trillion, and both houses have until Dec. 23 to approve the plan.
Reach Jim Turner at firstname.lastname@example.org or at (850) 727-0859 or (772) 215-9889.