(Updates with economist’s comment in third paragraph.)
Oct. 11 (Bloomberg) -- Florida forecast revenue to trail estimates by $1.57 billion over two years, joining at least two dozen states that have projected fiscal 2013 shortfalls.
The revenue outlook announced today by legislative forecasters may mean the state will be forced to cover another deficit in the coming fiscal year. Lawmakers have closed $17.8 billion of gaps since 2009.
“The pace of the housing and employment recovery has significantly slowed,” Amy Baker, the Legislature’s chief economist, said today in Tallahassee about the latest revenue estimate. “The adjustments to the forecast indicate an economy that is still in the throws of an abnormally slow recovery.”
States may face “widespread” budget cuts this year if revenue falters, driven by a sagging economy, Fitch Ratings said last week. In its fiscal 2012 first quarter, California revenue fell $705 million shy of forecasts, Controller John Chiang said yesterday, raising the chance of automatic spending cuts affecting universities and services to the elderly and disabled.
Although no further Florida budget cuts are expected this year, wide-ranging reductions are likely for 2013, state Representative Denise Grimsley, a Sebring Republican, said last week. Grimsley, who heads the Legislature’s budget commission, made the comment after lawmakers were told that the shortfall next year may reach $2.25 billion.
“The allocations you’re going to receive more than likely are going to be less than last year,” she told budget subcommittee leaders on Oct 6. “It’s going to be another challenging year for us.”
Collections for the current fiscal year are expected to fall $599.6 million, or 2.5 percent, below March forecasts. In 2013, revenue will likely trail estimates by $968.3 million, or 3.8 percent, Baker said, citing the report from the forecasters.
To close a $3.8 billion gap in this year’s $69.2 billion total budget, the state cut payroll costs by 3.6 percent, reduced spending for schools and began requiring workers to contribute 3 percent of their salaries toward pensions.
Florida’s reduced revenue forecasts reflect a slowing U.S. economic recovery from the longest recession in seven decades and a weak housing market, Baker said in an interview. Economists surveyed by Bloomberg in September forecast U.S. growth at 2.2 percent next year, down from 3 percent in March.
Revenue in fiscal 2012 may trail March estimates by no more than $273.8 million without creating a deficit, according to a long-range financial outlook adopted by Grimsley’s budget panel in September. In the first three months of fiscal 2012, which began July 1, Florida collected about $106 million less than estimated for the budget, Baker said.
Even before fiscal 2012, 24 states had projected about $46 billion in fiscal 2013 budget gaps, the Center on Budget and Policy Priorities, a nonprofit research organization in Washington, said in a June report. The group, which focuses on issues affecting lower-income Americans, said Florida has closed deficits of $17.8 billion since 2009.
--With assistance from Michael B. Marois and James Nash in Sacramento. Editors: Ted Bunker, Jerry Hart, Stephen Merelman.
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