Florida Housing Market Again Blamed For Budget Shortfall
Facing the worst budget crunch since the 2001, state legislators on Monday were told they might need to slash state spending by more than $2 billion in the next two years.
A bleak Florida housing market is the culprit, forcing a dramatic drop in state revenue collected through sales tax and real estate transactions.
This week legislators have begun the task of looking to slash $1.1 billion out of the $71 billion state budget that took effect on July 1.
Those cuts will be finalized during a three-week special session set to begin on September 18.
It’s anticipated the Legislature will have to trim up to another $900 million next spring when it must put together the next state budget.
Among the possible cuts in coming months are state spending on nursing home and hospital care for the poor.
Also, university students could face higher tuition as soon as January and people who use state programs, such as parks, could be facing higher fees.
Senate committees will look to cut 4 percent in the major areas of state spending, such as education, social services and education.
“These cuts will be very tough, but our goal is to affect the least amount of people,” said Senate Ways and Means Chairwoman Lisa Carlton, R-Osprey.
State spending has been buoyed in recent years by the Florida mortgage boom and hard-hitting back-to-back hurricane seasons in 2004 and 2005.
Storms cause billions in damage, but also fuel a rebuilding effort that boosts both Florida real estate and sales tax collections by billions.
“It’s either boom or bust,” said Sen. Gwen Margolis, D-Sunny Isles Beach.
For the past few years it was hurricanes that “made the budget work,” Amy Baker, the state’s chief economist, told legislators on Monday. “But you can’t rely on that … to bail you out again.”
As property taxes and insurance costs have also risen, the amount of people buying homes has declined - as has the number taking out cash-generating Florida home equity loans via refinancing.
SOURCE: South Florida Sun-Sentinel
