State Budget Shortfall Made Up By Stimulus
The $65.1 billion Florida State budget, reeling from a projected deficit of $6.1 billion for the fiscal year that starts July 1 will be dependent on an infusion of federal stimulus cash, higher taxes on tobacco, fees on motorists and court-filers, and a dramatic expansion of gambling to cover the shortfall.
The state’s budget was $73.7 billion in 2006 at the peak of the housing boom. The collapse in property tax revenues attendant to the shrinking of property values and the collapse in sales tax revenues with the onset of the recession has forced the state to find ways to cut the budget by $ 8.o billion dollars from the peak. The problem is that the State seems to believe that tax revenues will grow back to pre-2007 levels in the next few years. It may be making a mistake in thinking so. Governor Charlie Crist sure seems to be thinking short term and has grown very fond of the Obama, Pelosi, Reid stimulus package.
Few experts see a rebound to replace the shortfall anytime soon and the States projections may be the prototypical “rosy scenario” requiring a more tempered approach to spending once the stimulus dollars it is relying on to replace lost revenues are no longer available. The State needs to face reality and look to scale spending for a different set of economic realities for now and in the coming years. Everyone’s budget will be hit hard by the out-of-control spending by government, both at the state and federal level.
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