Budget Watch - Budget Surplus Threatened by Irma Impacts
Hurricane Irma Likely to Turn Next Year's Small Budget Surplus into a Shortfall
The Joint Legislative Budget Commission (LBC) met recently to adopt the Long-Range Financial Outlook, the constitutionally required annual report that looks at estimated revenues versus expenditures. The Outlook gives the Legislature a sense of the state’s budget position going into session and whether lawmakers can expect a budget shortfall or surplus.
The new Outlook forecasts that after funding a continuation budget, there will be $52.0 million in General Revenue (GR) left over. However, this estimate was developed before Hurricane Irma, and the LBC was advised to expect that the small surplus would be more than wiped out by needed hurricane-related budget amendments (see “Impact of Hurricanes” on page 11). In short, it is expected there will be a budget shortfall next year (FY2018-19).
Even before the hurricane is considered, the Outlook estimated the state was facing large shortfalls of $1.1 billion in FY2019-20 and $1.6 billion in FY2020-21. This is due to the continuing “structural imbalance” of the state’s recurring expenditures exceed recurring revenues. The hurricane will make it worse.
The Outlook further estimates that (even based on a $52.0 million surplus) that $369.5 million in spending cuts and/or revenue increases in each of the next three years will be needed to erase the shortfall in FY2020-21. An additional $189.6 million in recurring spending will have to be converted to non-recurring. Postponing corrective actions will make it even more difficult to resolve the future shortfalls.