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Sept. 1 (Bloomberg) -- Florida isn’t facing a projected deficit next fiscal year for the first time since at least 2007 because of permanent spending cuts that balanced this year’s budget, a draft study said.
The Republican-controlled Legislature closed a $3.8 billion gap in the current $69.1 billion budget with cuts including a 3.6 percent reduction in payrolls, a $542-per-student trim to education funding and a requirement that workers contribute 3 percent of salaries to their pensions.
Those moves will produce a $273.8 million surplus in fiscal 2013, said the report, released today by the Legislature’s research office. It also foresees no budget gaps in fiscal 2014 or 2015.
Future spending was “constrained by the amount of recurring expenditure-reductions taken,” said the draft three- year projection. “This has greatly improved the long-range financial outlook’s bottom line.”
This is the first time the state has predicted no budget gaps since a constitutional amendment was adopted in 2006 that required fiscal projections for three-year periods, the report said. A reduction in projected revenue, which is a “strong risk” because of the slowing economy, would cause a budget gap to develop, the report said.
Standard & Poor’s had assigned a negative outlook to the state’s credit rating in January 2009 because lawmakers used one-time revenue to balance the budget. S&P revised the outlook to stable on July 12, after the legislative session that imposed the latest spending cuts, citing “significant progress in re- establishing structural balance.” Florida carries S&P’s highest rating of AAA.
--Editors: Jerry Hart, Stephen Merelman
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