(The Center Square) – According to a newly-released report, Florida could be facing substantial financial headwinds in the form of budget deficits in next few years barring spending cuts.
The report from the nonprofit Florida Taxwatch says that while the revenues are strong now, rising costs for K-12 education and Medicaid could lead to a $6.9 billion deficit by fiscal 2027-28. The group says that if lawmakers continue to spend as they have in recent budget cycles, a $2.1 billion budget surplus this cycle will turn to a $2.8 billion deficit in fiscal 2026-27.
The report “recommends the Legislature not treat next year’s estimated surplus as another opportunity to increase spending. Instead, lawmakers should heed the outlook’s warning about waiting to address the deficits and begin reducing spending this session.”
The report also recommends reducing the number of member projects, which accounted for $2.8 billion. The group says that takes money from both critical and high-priority needs and increases the possible deficits. These include local transportation projects and water projects.
Florida Taxwatch has recommended previously that these projects should be limited and lawmakers should create a competitive, criteria-driven approval process for them. For water-related projects, the group recommends lawmakers create a multi-year water project work program to ensure taxpayer funds are spent wisely.
According to the last three outlooks issued by the General Revenue Estimating Conference, predicted surpluses have ranged from $13.5 billion to $15.5 billion as late as 2022. These outlooks assume that lawmakers will fund the baseline budget at the same rate.
According to the report, the state has $2.9 billion in critical needs and $4.6 billion in high priority needs.
K-12 education, which includes prekindergarten, will need $939 million in critical needs for the Florida Education Finance Program to cover enrollment growth of 51,423 students (1.5%) and increase per-student funding using the average of the past three years (4.2%).
About $686.2 million will be borne by local property tax revenues from escalating property values, with the remainder covered by state funds. High-priority needs will add up to about $337.2 million.
For higher education, the report says $988 million will be needed, with most of that in high-priority ($917 million) than critical needs, which include scholarships for children of deceased or disabled veterans and the Bright Futures Scholarship program.
Health and human services needs will require nearly $2 billion, economic development and transportation will need $707 million, criminal justice and courts will need $64.6 million and $1.29 billion for natural resources projects that include the restoration of the Everglades.
One item mentioned by the report is the state’s defined benefit pension system, which the report says will require an increase of $31.7 annually to eliminate any unfunded liabilities.
