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Economists find good news for schools, bad news for Medicaid

State economists on Monday found millions of extra dollars for the state’s public schools, but also a $29 million shortfall in takings from tobacco taxes and a landmark legal settlement with the tobacco companies.

The Revenue Estimating Conference projected that $128.4 million would remain unspent at the end of this fiscal year within the Educational Enhancement Trust Fund and the State School Trust Fund, financed primarily through Florida Lottery proceeds, slot machine taxes in South Florida, and proceeds from the sale of unclaimed property.

That means the Legislature will start out in the black when setting school spending priorities for the 2019-2020 fiscal year, said Amy Baker, coordinator for the Florida Office of Economic and Demographic Research.

“It’s nonrecurring, but it’s a boost for schools,” Baker said. “It’s more than they expected, right from the get-go.”

On the other hand, the outlook for Medicaid — the primary recipient of the tobacco money — “is not good news,” she added. “It’s showing that they actually have a projected hard deficit.”

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Medicaid is the joint state-federal health care program for the poor. “So, good news for education, not good news for Medicaid,” Baker said.

The economists warned of the problem last week, blaming it on a decline in tobacco use and a shift to vaping products that remain untaxed in Florida.

Moreover, R.J. Reynolds is in court contesting its obligation to continue payments under a 1998 legal settlement in light of its sale of cigarette brands to Imperial Tobacco Group.

The group has spent most of August reviewing its revenue forecasts, and planned to huddle again on Thursday to sign off on a projection for the General Revenue Fund, the main source of money to build a state budget besides trust funds.

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Written By

Michael Moline is a former assistant managing editor of The National Law Journal and managing editor of the San Francisco Daily Journal. Previously, he reported on politics and the courts in Tallahassee for United Press International. He is a graduate of Florida State University, where he served as editor of the Florida Flambeau. His family’s roots in Jackson County date back many generations.

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