The non-partisan taxpayer research organization Florida Taxwatch says in the next few years, Florida could see budget deficits.
“Next years budget outlook is fairly rosy, but future deficits loom,” said the group last week.
Looking at the long-range financial outlook for the state, TaxWatch predicts between the revenues and spending needs over the next three years, the state could see smaller surpluses and possible deficits.
The analyst at TaxWatch have been closely followed this trend, noting that state revenue collections have consistently exceeded growing estimates. This has enabled the Legislature to make major investments, reduce taxes, and maintain large reserves.
The new projections suggests that the good times will continue in FY2025-26, with General Revenue collections exceeding expected spending needs. Even assuming an unspent reserve of nearly $2 billion, Florida is projected to have a budget surplus of $2.1 billion next year.
However, the group also states if current spending trends continue, the state is predicted to face a deficit of $2.8 billion by FY2026-27. This deficit is expected to balloon to $6.9 billion by FY2027-28, as revenue growth slows and spending needs, particularly in education and Medicaid, rise faster than collections.
“”The Outlook warns that delaying action on these looming deficits will only make the necessary spending cuts or revenue increases larger, potentially reaching $4.2 billion annually for the following two years,” said TaxWatch.
More liberal groups like the Florida Policy Institute (FPI) are advocating policies like adopting Medicaid expansion, raising taxes and rejecting pass new sales tax holidays as way to avoid budget deficits in the state.
Last week, FPI said the state loses revenue through sales tax holidays must be made up elsewhere, either through spending cuts or by increasing other taxes.
“Although sales tax holidays are meant to offer taxpayers an opportunity to offset their general sales tax bill, they are not a long-term solution. By not enacting new sales tax holidays, Florida could raise $82 million per holiday week,” said FPI.
A move to hold scale back new sales tax holidays for Florida consumers may be on a smaller agenda for the state-run GOP controlled legislature in next year’s session.
