Budget Watch - Florida is Facing Large Budget Shortfalls

The severe economic contraction brought on by COVID-19 has reduced state revenues significantly. The pandemic is also increasing government costs such as virus response/recovery and assistance to those harmed economically by the public health emergency. This spells trouble for the current and future state budgets.

The legislative Long-Range Financial Outlook is a constitutionally required annual report that compares estimated revenues to expenditures to give the Legislature a sense of the state’s budget position going into session and whether lawmakers can expect a budget shortfall or surplus (for more description of the Outlook, see Appendix). It is a valuable tool that also looks ahead, giving a sense of what past budgetary actions mean for the state’s financial Outlook over the next three years.

The latest edition of the Outlook,1 recently adopted by the Joint Legislative Budget Commission, estimates that the FY2020-21 state budget passed by the Legislature last March will have a General Revenue (GR) budget shortfall of $2.750 billion after funding the base budget plus “critical needs” and “high priority needs.” This is considered a conservative continuation budget. Shortfalls of $1.883 billion and $0.928 billion are forecast for the next two budgets (see What Are the $2.653 Billion in Estimated GR Needs for FY2021-22? On page 9 for detail on these spending needs).