Lower gas prices and rising consumer confidence prompted state economists on Monday to boost revenue estimates for next year’s budget by $622 million.
The calculations improved the odds that Gov. Rick Scott will deliver on his campaign promise to cut taxes and fees, which lawmakers must approve. When Scott first announced a plan in late August to slash taxes and fees by $1 billion over the next two years, state economists were projecting next year’s budget to have a surplus of only $336 million.
But after a day-long conference Monday, economists upped the projected surplus to $958 million.
“I look forward to working with the Legislature to cut taxes by $1 billion over the next two years and increase K-12 per-pupil funding to the highest level in our state’s history this coming year,” Scott said in a statement.
Prospects for Scott’s campaign promises improved after a University of Michigan index last month measured national consumer confidence at above average and at its highest level since July 2007. That optimism, combined with dropping gas prices, have produced a rarity in recent Florida economic history: disposable income.
“It’s not a perfect correlation that people will go out and spend,” said chief state economist Amy Baker of the index. “But it is a signal that people are feeling good. ”
Baker said the lower gas prices were viewed more as a fluke.
“Our belief is that most will view (lower gas prices) not as a permanent change, but as a windfall, and spend it on taxable sales, meaning more Christmas shopping or one-time purchases,” Baker said.
Despite that caveat, Scott was ready to take credit for the sunnier forecast.
“Today’s news of increased revenue reflects the positive steps we are taking to grow the economy,” Scott said in a statement.
Even with a fatter surplus, Scott must get lawmakers to approve his proposed cuts in taxes and fees, which include $200 million in cuts from sales tax holidays, a $120 million reduction in the communications services tax, imposed on cell phones and other sources, and a $120 reduction on the $225 charge for first-time vehicle registrations.
Florida House Speaker Steve Crisafulli, R-Merritt Island, and Senate President Andy Gardiner, R-Orlando, issued statements pointing out that Scott is only one player who will help decide how the surplus gets spent.
“While it appears we will once again see a budget surplus in the upcoming fiscal year, it is important we don’t forget the principles that brought us here,” Crisafulli said.
“There is no shortage of ideas for how this slight increase in available general revenue could be spent,” Gardiner said.
Contact Michael Van Sickler at (850) 224-7263. Follow @mikevansickler