Politics

Uncertainty Prevails over Florida’s Budget

By: Jim Turner | Posted: December 6, 2012 3:55 AM

Florida Budget
Florida’s economic condition appears stable.

After years of $1 billion-plus shortfalls, legislators are looking at a shortfall of only $149 million in recurring revenue for the coming year and more than $600 million in nonrecurring money still in the budget.

Sen. Joe Negron, R-Stuart, chairman of the Senate Appropriations Committee, says that among his goals is to boost the state’s reverses from $1 billion to $1.5 billion in the next fiscal year as a means to build up the state’s credit ratings and as a brace against potential economic troubles.

And large shadows of uncertainty hover over the Capitol.

The state’s top economist, Amy Baker, told members of the Appropriations Committee on Wednesday that Florida is on pace for “gradual and slow improvement” and that “everything up to this moment is good.”  However, the state could face sharp revenue reductions if the recession in the eurozone grows, Congress and President Obama drive the nation’s economy off the fiscal cliff in the next month, or the state’s Supreme Court rules against the state in the law requiring state employees in the pension system to contribute 3 percent toward their retirement.

“The message is that this is not a large push-up, it can evaporate on you if economic circumstances turn against us,” Baker said of the potential ills labeled “black swans.”

Baker expressed confidence that the eurozone shouldn’t have a complete economic meltdown and the federal government will reach some conclusion to the economic debate to avoid sending the nation back into recession.

But, if President Obama can’t find a compromise with Congress, the fiscal cliff issue could become an $8 billion hit to the state’s overall economy, with entitlement cutbacks and with the military cutting back on contracts that spill over into the economy of communities surrounding bases.  

Without changes to the current federal sequestering law, about 80,000 jobs in Florida are at risk, Baker said.

“We know that from what happened in August 2011 that the response to great uncertainty in the U.S. economy can be fairly quick and fairly strong,” she said. “In August 2011 it took about a month. It doesn’t take long for things to unravel.”

Unless changes are made, the current cuts in the law that kick in Jan. 1 also include the expiration of the 2 percent cut in payroll taxes, emergency unemployment benefit insurance and Bush-era tax cuts.

For legislators, the more disastrous hit on the state budget for the current and next fiscal years could be the court ruling on employee pensions.

A ruling in favor of the Florida Education Association would approach $2 billion, with the state having to repay employees the 3 percent that was removed from their paychecks to help bolster the state pension program, with the total growing if interest is added, Baker said.

The state is contesting the ruling from March by Circuit Judge Jackie Fulford against the law requiring all state employees to contribute 3 percent of their pay toward the pension program.

Fulford ruled that the state requirement that all employees -- regardless of when hired -- pay 3 percent of their pay into the Florida Retirement System is unconstitutional and could mean a refund, with interest, to the more than 655,000 state and local government workers who pay into the Florida Retirement System.

The teachers' union contends legislators violated the state Constitution, which requires contract changes to be negotiated through collective bargaining.

The union didn’t argue against the state requiring employees hired after July 1, 2011, when the law went into effect, to pay into the Florida Retirement System.

Negron, an attorney, expressed confidence that the state will prevail when Florida’s top court eventually rules.

“We feel strongly it was a permissible action and an advisable position, but those of us who try cases and appeal cases, no one can predict with certainty how a court is going to rule,” Negron said.

Sen. John Thrasher, R-St. Augustine, noted the state has little control over the “black swans,” particularly the fiscal cliff and pension ruling.

“There is a lot of uncertainty out there and for our budget; if these two things come to fruition, it will be very, very difficult to put together,” Thrasher said.  I think either one could be devastating to us.”



Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.



Comments (5)

lee
12:08PM DEC 14TH 2012
MISCONCEPTION: "A ruling in favor of the Florida Education Association would approach $2 billion, with the state having to repay employees the 3 percent that was removed from their paychecks TO HELP BOLSTER THE STATE PENSION PROGRAM, with the total growing if interest is added, Baker said."

FACT: The 3% DID NOT go INTO the FRS trust fund to 'shore up the current unfunded liability', the Legislature used the 3% to to help balance Florida's budget!
lee
10:43AM DEC 14TH 2012
MISCONCEPTION: "A ruling in favor of the Florida Education Association would approach $2 billion, with the state having to repay employees the 3 percent that was removed from their paychecks TO HELP BOLSTER THE STATE PENSION PROGRAM, with the total growing if interest is added, Baker said."

FACT: The 3% DID NOT go INTO the FRS trust fund to 'shore up the current unfunded liability', the Legislature used the 3% to to help balance Florida's budget!
lee
10:43AM DEC 14TH 2012
MISCONCEPTION: "A ruling in favor of the Florida Education Association would approach $2 billion, with the state having to repay employees the 3 percent that was removed from their paychecks TO HELP BOLSTER THE STATE PENSION PROGRAM, with the total growing if interest is added, Baker said."

FACT: The 3% DID NOT go INTO the FRS trust fund to 'shore up the current unfunded liability', the Legislature used the 3% to to help balance Florida's budget!
RST
7:01PM DEC 6TH 2012
The 3% has been devastating to my one income family.....Many state employees qualify for government assistance. The state pays one way or another.
blouton
8:36AM DEC 7TH 2012
The state was told not to spend the 3% they are taking from state employees until the lawsuit is over and they did not do that, so they only have themselves to blame

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