State Economy at 'Beginning of the Pain'

TALLAHASSEE — The Legislature's chief economist this week said the numbers to be released Friday on the state's fiscal outlook won't be pretty and lawmakers will be forced into some tough decisions in the coming year.

At a presentation for Democratic House lawmakers, economist Amy Baker told legislators that the state could come out of a recession in about six months, but will largely be at a standstill for the next two years. This means, the state could stop losing money, but it won't be growing and earning more revenue. Baker said state economists are projecting the state will not be “back on track” until January 2010.

“We're just at the beginning of the pain,” Baker said.

State officials have pegged the state's budget deficit at more than $1 billion for the current fiscal year, putting lawmakers in the tough spot of having to make cuts or coming up with alternate sources of revenue.

Chief Financial Officer Alex Sink, a Democrat, has called on state lawmakers to return to Tallahassee before this spring to address the budget deficit in a special session. House Speaker Ray Sansom, R-Destin, said he will wait until after the latest official financial estimates are released Friday to decide whether a special session is needed.

Baker said it appears the state could fall into a $1.6 billion deficit for the 2010 fiscal year while only funding critical needs. Sansom and Senate President Jeff Atwater, R-Palm Beach Gardens, informed lawmakers Wednesday that there would not be enough money for pet projects that would benefit their districts.

"We also hope to avoid creating unrealistic funding expectations in our communities given the further declining state revenues. We look forward to working together with you during this biennium in seizing the opportunities and tackling the great challenges that lie ahead," the leaders said in a joint letter.

State agencies have already submitted their legislative budget requests to the governor's office, which include a worst-case scenario involving a 10 percent across-the-board cut to programs. But agency heads warned this could severely impair the state's ability to do business and to help Floridians who have been affected by the downward economic spiral.

And Baker told Democratic House members that in addition to the drop in revenue, the state has seen a higher need for money for Medicaid and community colleges because of enrollment increases.