Nov 22, 2008 8:28 pm US/Eastern
Fl. Legislators Eye Special Session For Budget
Florida's current budget could run a deficit of around $2.2 billion this year
TALLAHASSEE (CBS4) ―
According to the latest report from state economists, Florida's financial problems are even worse than expected.
Florida's current budget is expected to run a deficit of around $2.2 billion this year. Declining tax collections and the struggling economy are putting more pressure on the state's finances.
Economist Amy Baker says there are a few things to blame for the state of the state's budget. "We had essentially three economic shocks since we last met. The first one was a complete freeze in the credit market. The second one was the spread of the national recession to the global recession, and then the third one is an additional loss of wealth for people as stock values, investment portfolios, IRA's, savings, all took a dive in value."
The outlook for next year is even worse. Baker says it looks as though it will be at least two years before Florida's economy returns to normal and state revenues will be down.
Now, Governor Charlie Crist and the legislature must decide what to do about the $2.2 billion hole. The state constitution prevents the state from spending any money while in a deficit.
Some lawmakers and Chief Financial Officer Alex Sink are urging Crist and legislative leaders to call a special session to deal with the deficit. They have not committed to such action yet.
The governor and Legislative Budget Commission could borrow up to $1 billion from the state's tobacco settlement fund, but the fund only has $1.1 billion available right now. The value has dropped a lot because of recent losses on Wall Street. The fund has dropped nearly a billion dollars since June.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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