The Corcoran Report: January 2009
As 2009 dawns, Governor Charlie Crist, the Legislature and local governments across Florida are focused singularly on the most basic of all issues, Florida's state budget.

As you know, early in 2008 Florida's Legislature met prior to the regular Legislative Session to reduce the budget. Following the Legislative Session in 2008, more than $6 billion had been cut from the state budget.

These cuts, combined with funds from Florida's surplus accounts, were anticipated to be sufficient to weather the economic storm. However, through the summer of 2008, with tax collections decreasing month after month, it became apparent additional reductions might become necessary.

In mid-November of 2008, Florida's Revenue Estimating Conference, comprised of the state's economists, released a forecast projecting a $2.3 billion dollar deficit at the current rate of spending. Just two weeks later, additional data indicated a double-digit increase in applications for Medicaid and other state health and subsistence-based care services.

By early December, Florida Legislative leadership determined the worsening economic climate dictated the need for a special session to address the current budget.

The special session, which began January 5th and is expected to end on January 16th, is currently underway as of this writing. At the beginning of the session, state economists revealed that actual revenue collections in million short of projections by the end of the fiscal year on June 30th.

During this special session, spending reductions will occur in just about every area of Florida's budget. Health care, education, the college and university system, corrections and just about every other area of Florida's budget will be cut. Under the Senate's plan, Florida Forever, the landmark land-purchasing program administrated by the state, will be suspended. Additional fees are also included in the amended budget, such as increases in civil and criminal court fees and increases in speeding fines.

Florida's surplus funds balance is also declining. Currently, there is just more than $1.3 billion remaining in what is referred to as Florida's "rainy day" fund.

However, what looms ahead is also daunting. In March, the Legislature will begin the regular Legislative Session where the focus will be the FY 2009-2010 budget. Already the state's economists are predicting the need to reduce spending by at least an additional $4 billion. This reduction will be on top of the anticipated $2.3 billion reduction being passed in the current special session.

As a result of the current economic reality, legislators are weighing all options to increase revenue and decrease the number of cuts which must be made in next year's budget. A proposal to increase sales tax on cigarette packs to $1.00 was not considered during the special session but is anticipated to be vigorously debated during the regular session. Several other proposals are anticipated including additional taxation on bottles of liquor and taxation on Internet sales, which are currently exempt.

In addition, there is growing support to re-consider former Senate President John McKay's proposal to eliminate tax exemptions for products and services. There are more than 240 current tax exemptions in Florida law, and estimates suggest that the state could collect an additional $12 billion in sales taxes if the exemptions were removed.

We anticipate that the regular Legislative Session will be extraordinarily unique as a result of the continuing economic conditions being felt throughout our state and nation. We also anticipate that because the current budget cuts have truly begun to impact services at the local citizen level, there will be a more vigorous discussion and debate than in recent memory, as even traditionally conservative members give great consideration to significant fee increases and the reduction of sales tax exemptions in Florida.

Thank you for the opportunity to continue serving you. We stand ready to assist and answer any questions or concerns that you may have and provide any research and information that you desire. Please don't hesitate to contact us.

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