The Budget Outlook for FY2017-18 is Getting Tighter
Just as they did at their last conference in January, Florida’s revenue estimators reduced the state’s General Revenue (GR) projections. The GR Estimating Conference met on August 15, 2016 and reduced expected collections by $131.9 million in the current year (FY2016-17) and by $131.1 million for the next budget year (FY2017-18). This two-year total reduction of $267.0 million follows the $388.5 million reduction made last January.
Actual GR collections in FY2015-16 (ended June 30, 2016) exceeded the previous estimate by $50.6 million, slightly tempering the impact of the reduced estimates on the next budget.
Even with the reduced estimates, collections for FY2016-17 are about $1.0 billion (3.6 percent) higher than the previous year and growth of $1.35 billion (4.6 percent) is expected in FY2017-18.
Back in July, estimators adopted national and state economic forecasts that reflected worries stemming from Brexit and mixed signals from employment data. This resulted in a less optimistic economic outlook that served as the basis for the GR estimates. Estimated sales tax revenues were revised downward by $434.9 million over two years. Slowing mortgage refinancing activity also led to decreased documentary stamp tax estimates of $68.2 million. Due to limited opportunities for strong earnings in the current interest rate environment, the state can now also expected lower earnings on its investments, resulting in a $40.4 million reduction in estimated GR earnings.