BRADENTON, Fla. — Florida economists are now predicting a bigger budget shortfall than they projected just three months ago in a change that could translate into less bonding power for the state in fiscal 2012.
The downward revision was disclosed Tuesday, at a general revenue estimating conference.
Revenues supporting the general fund are expected to be $612.2 million less than estimated in September despite the fact that many revenue streams are growing. However, they're growing more slowly than economists expected.
If the current projections hold and the Legislature approves a budget comparable in size to the past few years, Florida will now face a budget gap of $3.5 billion in fiscal 2012, according to Amy Baker, coordinator of the Legislature's office of economic and demographic research.
"That means either constraining the size of the budget, which is most likely, or increasing revenues, which is not likely," Baker said.
Economists determined Tuesday that a shortage of revenues for the current $70 billion state budget will be offset by taking $600 million from the $850 million working capital reserve, also known as the rainy-day fund. No funds are expected to be taken from the separate $275 million budget stabilization fund.
The disappointing revenue estimates surfaced despite the fact that economists have seen year-over-year growth in many of the revenues supporting the general fund since the spring. They said Tuesday's adjustments are indicative of an economy that is still in the early stages of an abnormally slow recovery.
"It's just not met our expectations of how we thought it would unfold," Baker said.
Even though there has been growth in the state sales tax, which provides about 75% of the general fund revenue, Baker said monthly sales tax receipts are running about 1% below estimates. Florida does not have a state income tax.
Economists don't expect most revenue sources supporting the general fund to return to the peak levels seen during the boom years until 2014, according to Baker.
A debt affordability report, which calculates Florida's debt spending based on a percentage of revenues, is due for release soon. The lower revenue estimates could impact how much the Legislature authorizes in bonding for fiscal 2012.
Tuesday's economic report will be used by Governor-elect Rick Scott to formulate his first state budget recommendation. Scott will be inaugurated Jan. 4. His budget proposal is due in February.
So far, Scott has not stated publicly how he will trim the budget other than through government "streamlining," which could include privatizing prisons. It remains unclear if the Republican will support the state's high-speed rail project even after the federal government allocated another $342 million to it last week, following cancellation of similar programs in Wisconsin and Ohio.
Scott has said that he wants to study the financial feasibility of the project. The federal government now has provided $2.392 billion toward the estimated cost of $2.6 billion for the first leg of the project between Tampa and Orlando.
Approximately $1.6 billion of the federal government's contribution is a grant. Another $800 million comes from a federal program that requires a 20% match of $280 million.
In late 2009, a legislative special session created an ongoing source of funding for passenger rail throughout Florida — a move that helped the state win $1.2 billion in federal stimulus act funding early this year.
So far the state has received $66.7 million of stimulus funding, which is being used to complete 30% of the Tampa-to-Orlando design, update ridership projections, and prepare for the release of bid documents early next year.
Scott is unlikely to announce his position on Florida's high-speed rail initiative until after he takes office.