BRADENTON, Fla. - With Florida facing a projected deficit of $2.3 billion through the end of the fiscal year, new Senate President Jeff Atwater said he believes lawmakers may be forced into a special session in January to deal with budget cuts.

"Throughout the nation, and particularly this state, there has been a tectonic shift in the structural underpinnings of our economy," Atwater, a Republican from North Palm Beach, said Wednesday during an economic briefing with the full Senate ahead of appropriation committee meetings next week.

Revenues supporting the $66 billion state budget continue to decline quicker than state economists anticipated. Revenues declined 4.6% in fiscal 2008, compared to the year before. So far this fiscal year, revenues have declined 5.99% over fiscal 2008. The state budget is dependant on revenues such as sales and use taxes since the state has no personal income tax.

The urgency in holding a special session is that January will mark the mid-point in the fiscal year, while the regular legislative session doesn't start until March 3.

Underpinning the decline in revenues are several factors.

Florida's unemployment rate is now 7% and it is projected to be at 8.1% by next summer, according to a report this week by the Legislature's Office of Economic and Demographic Research.

Florida's growth is now decelerating. The state's gross domestic product ranked 47th in the nation in real growth in 2007. It ranked 12th in 2006 and second in 2005.

State economists said the drags on revenues are more persistent relative to some past events, and strength will be slow to return because the credit market remains frozen and global recessionary conditions affect international migration, tourism and spending decisions, as well as exports. They also said the outlook for the coming holiday season is poor.

Lawmakers are considering options for trimming the budget. They include permanently cutting the 4% that Gov. Charlie Crist has so far ordered state agencies to hold back in their budgets, eliminating state programs and services, redirecting trust fund revenues set aside for other purposes to the general fund, and dipping into endowment and budget stabilization funds.

Sin taxes also may be on the table to increase revenues. But that has met with resistance from Tax Watch, a statewide organization that monitors state spending.

"We must not try to tax our way out of this economic downturn, which would only make matters worse," TaxWatch president Dominic Calabro warned when economists announced the latest decline in revenue estimates. "Instead, we must work aggressively to help the economy, eliminate duplicative government functions, streamline government activities to improve efficiency, and examine every area of state spending to determine what is essential and what is not."

Since a major portion of state spending is for public schools, they could take a hit in funding when budget adjustments are made. School districts are already suffering from state-mandated budget cuts and lower property values on which to assess taxes.

The Miami-Dade County School Board voted Wednesday to sue the state, hoping to recoup $34.7 million. The district lost the funding as a result of an act of the Legislature, which changed annual certification of the tax rolls to March from September. The switch changed budgetary cycles resulting in a loss that Miami-Dade school officials believe the state should fund.

On Tuesday, the Broward County School Board voted to seek $500 million from the federal government's bailout package. The district has cut its budget due to lower revenues and property values, and decided to seek federal funds for capital projects.

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