Sandra Wilson, March 14, 2008 FY 2007/08 ReductionsOn Wednesday, the Legislature passed the conference report on special appropriations bill HB7009 and delivered it to the Governor. This is the bill that further reduces the FY 07/08 budget beyond the reductions taken in Special Session C. There were no changes to FWC’s portion of the reductions during conference, so the impact is same as reported last week: A reduction of $2.1 million and no positions cut:
-$392,196 Law Enforcement
-$758,072 Habitat and Species Conservation
-$ 65,373 Hunting and Game Management
-$ 92,249 Freshwater Fisheries Management
-$ 96,774 Marine Fisheries Management
-$432,406 Fish and Wildlife Research Institute
-$282,411 Administrative Offices FY 2008/09 Revenue ShortfallsThe Revenue Estimating Conference met on March 11th to update the State General Revenue projections and the news is very grim (Executive Summary attached). Appropriations committees are reviewing agency 10% cut lists to reduce the base budget for FY 08/09. They expect to have to dig deeper still; the severity of cuts this Legislature will have to make is unprecedented. Staff spoke to the Senate General Government Appropriations Committee on Thursday regarding FWC’s 10% cut list and possible mitigation strategies. To recap, the list includes: -$25,000 trust – eliminate Florida Keys mooring buoy contract
-$850,000 GR – eliminate red tide control & mitigation grants
-$400,000 trust – eliminate boating safety education & manatee avoidance technology grants
-$4,094,749 trust – reduce lake restoration projects
-$80,000 GR – eliminate Smithsonian marine ecosystem exhibit contract
-$124,800 trust - eliminate Smithsonian biological monitoring contract
-$1,200,000 GR – reduce red tide monitoring and research
-$1,150,000 trust – eliminate reimbursements for manatee rehabilitation
-$850,000 trust – eliminate funding for UF marine mammal veterinary care
-$4,555,350 & 90 FTE GR & trust– reduce law enforcement
-$3,003,303 trust – reduce non-CARL land management Potential mitigation strategies to release GR in lieu of cutting law enforcement include: Raise vessel registration fees up to 55% to recapture lost buying power due to inflation (consumer price index adjustment from 1991, the last time the fees were increased). This could increase revenues up to $10 million. Reduce Florida Boating Improvement Grants by $4.6 million and shift law enforcement salaries into the marina fuel tax revenue source Raise the new resident vehicle title fee from $4 to $8 to recapture lost buying power (consumer price index adjustment from 1986, when the fee was created). This would help stabilize the Nongame Wildlife Trust Fund and provide another $1 million available for fund shift. Shift $1.3 million GR-supported administration to trust. The cuts made in HB7009 allow the trusts to absorb this shift without effect.
The Revenue Estimating Conference also updated their estimates for documentary stamp tax revenues and there are severe impacts for FWC there as well. Last March, the Conference projected FWC’s share of FY 08/09 documentary stamp revenue for non-CARL land management would be $11 million. The latest projection shows it will be $6.4 million. This latest projection also shows lake restoration revenue dropping from $9.4 million to $8.2 million and marine mammal care revenue dropping from $2 million to $100,000. FWC staff is currently reviewing the impact on current programs and preparing recommendations.
Next week, the House and Senate will continue the difficult task of identifying deep cuts for fiscal year 2008/09. Top of page Executive Summary
Revenue Estimating Conference for the General Revenue Fund
March 11, 2008Since the General Revenue Estimating Conference held in mid-November, there has been
continued tightening of credit market conditions, escalating energy prices, falling employment
and further deterioration in the housing market as the nation faces an economic contraction. In
response, the Revenue Estimating Conference has reduced its General Revenue outlook by over
$2.9 billion for Fiscal Years 2007-08 and 2008-09, combined. Collections for Fiscal Year 2007-
08 are expected to be $1.0 billion or 3.9% below the estimate from November. For Fiscal Year
2008-09, expected revenues were reduced by $1.9 billion or about 7.3% from the earlier forecast. Estimated revenue collections in Fiscal Year 2007-08 are less than Fiscal Year 2006-07 receipts
by $1.9 billion or 7.3%, adding to the decline over the prior year’s level. The Fiscal Year 2008-
09 forecast has growth of less than 1% above the Fiscal Year 2007-08 estimate. The revisions to the forecast are attributable to several factors. First, the previously adopted
national economic forecast calls for an economic contraction that is dampening consumer
expenditures and business investment, as well as employment and population growth. This
situation is exacerbated by further tightening of credit and lending practices amidst increasing
inflationary pressures and higher energy costs. These factors will prolong the downturn in the
state’s housing market and influence revenue collections in the following ways: Sales Tax collections are weaker as Floridians curtail purchases of big-ticket items like
automobiles and expenditures on other non-essential items. This retrenchment in
consumer spending is caused by the diminishing wealth effect from housing price
appreciation, coupled with flagging consumer confidence. Business and tourist-related
purchases have also been sluggish and are expected to remain lower than previous
estimates. These adjustments persist throughout Fiscal Year 2008-09. Documentary Stamp and Intangibles tax collections are expected to further decline as
the adjustments to tightened credit conditions and stricter lending standards take hold.
Home prices are weakening and downward pressure on collections will continue until the
housing market stabilizes. Because of recent statutory changes, the General Revenue
Fund will experience the bulk of the documentary stamp tax losses. Corporate Income Tax collections further weaken in Fiscal Year 2008-09 with a
projected loss of 4.5%. This weakness is largely due to: (1) lower profits in companies
previously benefiting from the overheated real estate market, (2) adjustments to subprime
and other credit-related losses, and (3) compressed profit margins caused by the
economic downturn and higher energy prices.
While the economic and demographic outlooks have worsened in the short run, growth rates are
expected to improve by late Fiscal Year 2008-09. However, revenue collections are not
anticipated to exceed the Fiscal Year 2005-06 level until Fiscal Year 2010-11. Top of page |
