BRADENTON, Fla. - The FloridaLegislature on Wednesday agreed on a bill to chop $512 million out of the state budget.

Gov. Charlie Cristsaid he would sign the measure despite the fact that the largest cut, $350 million, will come from public school budgets.

The latest budget reduction is the second this fiscal year in response to general fund revenues that are declining much faster than anticipated. In a special session last October, lawmakers cut $1.1 billion from the $71.5 billion budget due to the projected revenue shortfall at that time.

But more bad budget news arrived on Tuesday from state forecasters, who meet periodically to estimate the amount of revenues the state can expect to collect.

They revised incoming revenue estimates downward for this fiscal year for the fifth time, meaning that cumulatively general revenues supporting the fiscal 2008 budget are expected to be $4.2 billion less than originally thought. The actual impact won't be known until after the fiscal year closes June 30.

Forecasters on Tuesday also dropped estimates of revenues expected to support the fiscal 2009 budget by $1.9 billion. It was the third time they revised downward revenue estimates for fiscal 2009, so that means lawmakers can expect $4.7 billion less in revenues on which to build next year's budget.

"The drop in revenues is significant, and it puts the state budget in a very serious situation," said Senate President Ken Pruitt, R-Port St. Lucie. "We must not take financial shortcuts in order to avoid the political heat that budget reductions will bring. We are going to need everyone to pull together to get through these difficult times."

The dim revenue outlook represents weaker sales tax collections, the largest source of income for the state budget, brought about because Floridians curtailed purchases of big-ticket items like cars and non-essential items, forecasters said. The state doesn't collect personal or property taxes, so it relies largely on sales and use taxes. Much of those are collected on real estate sales.

While previous revenue forecasts focused a great deal on adjustments brought about by the downturn in the housing market, which has hit Florida harder than many states, Tuesday's forecast included adjustments for the "national recession," said Amy Baker, coordinator for Florida's revenue estimating conferences.

Now the work begins cobbling together a budget for fiscal 2009.

Some lawmakers do not support Crist's proposed $70 billion spending plan, because it taps $1.1 billion from various reserves. It also relies on non-recurring funds for recurring programs, as well as funds from a tribal compact that is tied up in a legal dispute. His budget also proposes issuing more than $2 billion in new debt, while maintaining $4.5 billion in reserves.

The high level of reserves coupled with the Legislature's willingness to address budget shortfalls in a timely fashion have, so far, alleviated analysts' concerns about the Sunshine state's slowing economy.

Florida's general obligation credit is rated AAA by Standard & Poor's, AA-plus by Fitch Ratings, and Aa1 by Moody's Investors Service.

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