PRESS RELEASE September 7, 2001

TALLAHASSEE -- Florida leaders have a daunting task over the coming months as they struggle to re-balance Florida's budget for the current fiscal year. However, they are not approaching this journey without a roadmap. Florida law provides guidelines and procedures to help them deal with the projected deficits. A new Budget Watch report from Florida TaxWatch aims to help taxpayers understand the procedures state leaders are required to follow. The report also provides historical background to put the deficit in perspective.

"State leaders are by no means faced with navigating uncharted waters," said Dominic M.Calabro, President of Florida TaxWatch. "In fact, it appears the current projected deficit will be just half the amount Florida faced in 1990-91, out of a total General Revenue Fund that has nearly doubled over the same time period. The current fiscal storm is nowhere near the magnitude of the troubles Florida weathered a decade ago."

There are two possible scenarios prescribed by state law for dealing with the projected deficit, and the method used is determined by the extent of the deficit. If the deficit is deemed to be 1.5 percent of or less than the amount appropriated from the General Revenue Fund, the Governor and Chief Justice are required to develop and submit plans of action to eliminate the deficit for their respective branches. If the projected deficit is deemed to exceed 1.5 percent of the moneys appropriated from the General Revenue Fund, the Legislature assumes the responsibility for resolving the deficit.

According to the TaxWatch report, the latter is the most likely scenario unless new Revenue Estimating Conference projections unveil an unanticipated revenue windfall. Legislative action would be trigged by a $300 million dollar projected shortfall. Lower General Revenue projections from the slowing of economic growth combined with a projected $190 million hit from the federal government's phasing out of the estate tax could leave Florida as much as $600 million below initial revenue projections. The next meeting of the Revenue Estimating Conference, set for September 13th, should further clarify the extent of the shortfall.

"While it is pretty certain the deficit level will require legislative action, it is not clear at this time whether the legislature will call a Special Session to resolve the matter or wait until they convene for the regular session in January," Calabro said.

The TaxWatch report outlines four options which will be available to lawmakers to balance the budget:
Reducing agency budgets uniformly
Using nonrecurring funds from the Working Capital Fund to offset it
Using nonrecurring funds from the Budget Stabilization Fund to offset it
Using some combination of funds from the Working Capital Fund and the Budget Stabilization Fund to offset it

"While the budget reductions of 1990-91 were no doubt painful, a 1991 TaxWatch study showed no student was denied an education, no criminal was turned back to the general population, and no indigent Floridian was denied other necessary needs as a result of the reductions," Calabro said. "Floridians should expect no less as our state leaders work diligently and within the framework provided by state law to make responsible decisions that will see us through these stormy fiscal times."