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State on track for billion-dollar budget windfall but will have little money for new spending

State Florida’s economy will produce an extra billion dollars for state budget writers but the state’s chief economist says the windfall is just slightly ahead of growing expenses. Twice in the past six months state economists have adjusted their revenue forecast for next year by hundreds of millions of dollars. And although that produced a billion-dollar surplus, the state’s chief economist said in the context of a $77 billion current state spending plan and the depth of the 2007 recession, it’s not that much.

“Even though this is about $700 million more than what the Legislative Budget Commission knew in September, you are less than $200 million better than you were last year,” state economist Amy Baker Thursday told the Senate Appropriations Committee.

She advised lawmakers this year’s budget writing won’t be any easier than it was.

Baker said the Florida economy is transitioning to a “new normal.” Population growth remains the state’s primary engine of economic growth with near-term growth averaging 1.3 percent; the growth rate between 1970 and 2010 averaged 3 percent. And despite consecutive years of more than 30 percent growth in the construction industry, key construction metrics are not expected to return to pre-recession levels until 2023.

Still, Florida lawmakers can expect an additional $1.03 billion for next year’s state spending plan and, as Senate President Andy Gardiner has observed, there is no shortage of suggestions on how to spend it.

Gov. Rick Scott’s proposed budget is expected next week. Scott campaigned for re-election promising a billion dollars in tax cuts over the next two years and to increase public education spending to a record level.

This year, Scott wants to cut the communication tax by $470 million and lawmakers appear receptive to the idea.

“Governor Scott is once again leading the way on tax relief,” said state Rep. Matt Gaetz, chairman of the House Finance and Tax Committee. “The governor’s plan is our starting point. In my committee, no tax is safe.”

Scott is also proposing eliminating the sales tax on textbooks and expanding the Bright Futures scholarship to cover summer term. Also, Florida state agencies are requesting an increase of $660.8 million in their budget requests, according to numbers compiled by Florida TaxWatch.

Lawmakers also must account for a voter-approved constitutional amendment earmarking a percentage of documentary stamp revenue to conservation programs. Baker said doc stamp collection is running about 2 percent above last year’s total.

“We can see where we are going to be spending a lot of hours determining how to reduce programs and how to offset doc stamp revenues that are currently being used with GR revenues in the future, so hang on to your hats. We’ll get it down one way or another,” said state Sen. Alan Hays, chair of the Appropriations Subcommittee on General Government.

State Sen. Tom Lee will lead the Senate in writing a state budget and compared the exercise to a carpenter balancing a three-legged stool. That is, the budget is balanced by the needs of the Senate, House and governor.

“Everyone has to walk out of here with their priorities addressed to some extent. We’re all in this together and while I support all these tax cuts at some level there is only so much resources to get them done,” said Lee. “We appreciate the governor making the proposals, putting the marker out there and we’re going to try to do everything we can to help him be successful.”

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