Grim Budget News from The Revenue Estimating Conference

I received the below email late yesterday afternoon from the Florida School Boards Association Director of Legislative Relations, Ruth Melton. As expected, K-12 Education funding may be cut again for this fiscal year and again next fiscal year. Mrs. Meltons Email:




Ladies and Gentlemen:


TODAY’S REVENUE ESTIMATING CONFERENCE
When the Legislature crafted the $66 billion budget for this year (FY 2008-2009), they expected that the state would receive about $40 billion in federal and local revenue and that the state would earn the remaining $25 billion from general revenue. In August, the Revenue Estimating Conference announced a general revenue shortfall of about $1.7 billion. At that time, state agencies were subjected to a 4% holdback of funds (2% for school districts) -- which covered about $1 billion of the revenue shortfall – and Governor Crist exercised the authority granted to him by the legislature to cover most of the remaining shortfall from state reserves. This move avoided the need to call a special session prior to the November elections.

In recent weeks, preliminary forecasts indicated that an additional shortfall was looming. State agencies were advised to develop a budget that reflected a 10% reduction in funding. True to expectation, today the Revenue Estimating Conference projected that there will be an additional general revenue shortfall of $1.5 billion in addition to the $1.7 billion shortfall in August (for a total of $3.2 billion LESS than expected to support the 2008-2009 budget). Although Governor Crist still has the authority to use state reserves to help offset this shortfall, sufficient funds are not available -- the funds in the Lawton Chiles Endowment Fund (Tobacco Settlement Trust Fund) are invested and, therefore, have been diminished by the current market conditions. This fact makes it very difficult, if not impossible, to avoid a Special Session of the Legislature. It is unlikely that such a session will be called before January 2009. At that time, if there is no new influx of revenue, it is expected that K-12 education will be cut by AT LEAST $500 million -- and this does NOT include reductions that may occur in local funding due to reduced property tax revenue. In general, school districts are advised to brace for an ADDITIONAL 2-3% budget cut for THIS fiscal year.

Although legislators are still shy of discussing the possibility of establishing any new revenue sources to offset these shortfall, it is worth noting that Senate President Jeff Atwater and House Speaker Ray Sansom have jointly announced that the 2009-2010 budget will not include any of the popular "member projects" that usually grease the appropriations process.

As of this writing, the official report of the Revenue Estimating Conference has not been published and it is difficult to report what the Conference has projected for next year’s budget. We will provide you with that information, and any other details, as soon as it is available.


I regret that I am unable to report better news. Please let me know if you have any questions.

Ruth

Ruth Haseman Melton
Director of Legislative Relations
Florida School Boards Association