Florida budget forecast optimistic but Medicaid enrollment, worker shortage pose risks

by | Oct 21, 2021

 

(The Center Square) – Florida lawmakers will have $7.3 billion in unallocated general revenues to spend when they begin their 60-day 2022 legislative session on Jan. 11.

That’s good news, the Florida House’s budget chief said Tuesday, especially when compared to what state legislatures were looking at this time last year.

But, House Appropriations Committee Chair Rep. Jay Trumbull, R-Panama City, stressed that with billions of federal pandemic assistance and stimulus money in state coffers, or headed soon to Tallahassee, fiscal prudence will define Florida’s approach.

“Compared to last year, we’re in a much better position than we were when we were having December committee meetings about looking at a $3 billion shortfall, and this year we’ve got some significant reserves,” Trumbull told the House panel, which assembled in Tallahassee for its first pre-session, cautioning against funding programs that induce recurring expenses.

Florida’s Fiscal Year 2022 budget (FY22), which went into effect on July 1, was the largest in state history at $101.7 billion and $9 billion more than FY21’s spending plan.

Much of that increase was fueled by federal pandemic assistance approved by Congress in 2020 and 2021.

Florida state and local governments received $8.3 billion from the March 2020 $2.2 trillion Coronavirus Aid, Relief & Economic Security (CARES) Act, including $4.6 billion to the state.

Under the $1.9 trillion American Rescue Plan Act (ARPA) adopted in April 2021, Florida state and local governments have in hand, or will receive, $15.9 billion, including $4.4 billion for the state.

The federal pandemic assistance comes despite the state dramatically exceeding revenue forecasts.

In the spring of 2020, state economists in the Revenue Estimating Conference (REC) issued a two-year projected pandemic-induced income shortfall of $5.4 billion.

That projected revenue shortfall was scaled back to $3.3 billion in December. In April and August, those forecasts were further revised upward and now the REC estimate exceeds revenue forecasts by $2.3 billion.

Florida Bond Finance Director Ben Watkins told the committee the state still has a sterling AAA bond rating and is ready to “move the needle in terms of strategic investment in infrastructure and strategically important assets for the state.”

Like Trumbull, Watkins said lawmakers must look for investments with the federal aid “rather than (the money) being programmed for recurring expenditures, and that’s extraordinarily important from a financial management and the credit ratings perspective.”

But there are potential budget-busters on the horizon, such as the state’s climate change-induced property insurance market crisis, inflation, worker shortage and Medicaid, Trumbull and Watkins warned.

Florida’s Medicaid enrollment has increased by 1 million and will top 5 million this year. About 23% of all state residents are enrolled in the federally subsided health care program, which will cost the state an additional $1.2 billion this year compared to last.

CARES Act and ARPA won’t be the only sources of federal dollars during the 2022 legislative session. Florida is slated to get billions, the state government alone at least $4.4 billion, under the $1.2 trillion Build Back Better infrastructure plan adopted by the U.S. Senate in August now being debated in the House, where Democrats want to triple it.

As far as Trumbull is concerned, that money does not exist until it is in hand.

“Don’t count your chickens before they hatch,” he said. “I have no idea if that money is actually coming or not. We won’t know until it’s sitting in the bank account, so we’ll cross that bridge when we get there.”

0 Comments

Leave a comment

 
 
%d bloggers like this: