- November 23, 2024
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TALLAHASSEE — Legislative budget leaders said they expect lawmakers to remain “fiscally responsible” after being advised Friday the state faces potential deficits in coming years as federal coronavirus pandemic money dries up.
After receiving a presentation about Florida’s long-term-financial outlook, House Appropriations Chairman Tom Leek, R-Ormond Beach, expressed optimism that lawmakers during the 2025 legislative session will handle needs for spending in areas such as education and health care.
“I tend to believe that Florida will continue to have revenue surpluses, just because it's got a strong history of doing that,” Leek, who is running for the Florida Senate, told reporters. “But in the event that it didn't, the system itself is already set up to be flexible enough that you could make those decisions annually.”
Senate Appropriations Chairman Doug Broxson, R-Gulf Breeze, said lawmakers have not attached federal pandemic aid to long-term projects or programs since the money started pouring in after the 2020 legislative session.
But Broxson said temptations remain, as any remaining pandemic money must be allocated in the next budget year.
“My concern … and you saw some of this last year, is there is a temptation to take non-recurring money and make long-term commitments,” said Broxson, who will leave the Legislature in November because of term limits. “I would hope that we would continue to be the state that stays within our budget and does not put additional pressure on already over-pressured taxpayers as we move forward.”
Economist Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, outlined the long-term financial outlook during a meeting of the Joint Legislative Budget Commission, which is made up of House and Senate members.
While there are numerous caveats, the picture could go from a $2.09 billion surplus during the upcoming 2025-2026 fiscal year to a potential deficit of $2.826 billion in the 2026-2027 fiscal year and a potential deficit of $6.941 billion in the 2027-2028 fiscal year.
“We have to acknowledge that fiscal strategies are going to be needed,” Baker said.
The projections are based on lawmakers continuing current patterns of spending and tax breaks while the state continues to rapidly grow.
Future revenue also could be affected by consumer spending.
Baker said one-third of Florida households face reduced savings and maxed-out credit cards amid waning inflation, and even if the Federal Reserve cuts interest rates this month, there will be a “lag” before any change is felt economically.
Meanwhile, lawmakers will also have to consider the costs of retiring Baby Boomers moving to the state.
Baker said 14 percent of the generation has entered retirement age and will make up one-quarter of Florida’s population by 2030.
Baker said that will drive up costs for health care, transportation and housing.
Most retirees will be on the Medicare and Medicaid health-care programs. Medicare is a federal program, while Medicaid is jointly funded by the state and federal governments. Baker said the state is “not going to be the biggest provider of health care, but we’re not going to be immune to it.”
In August, a panel of economists known as the Revenue Estimating Conference increased general-revenue projections by a total of about $2 billion for the current fiscal year and next year, with about half of the projected increase tied to anticipated earnings on historically high state investments receiving favorable interest rates. The 2024-2025 fiscal year started July 1.
Baker described the outlook for Florida and the nation as “stable and coming back to normal,” as the economy transitions out of high inflation and high interest rates.
The U.S. Department of Labor said Friday the August national unemployment rate was 4.2 percent, down from 4.3 percent in July. Florida’s rate stood at 3.3 percent from April through July, and an August state rate will be released Sept. 20.
