Q&A of the Day – About Florida’s balanced budget & DeSantis vetoes
Each day I’ll feature a listener question that’s been submitted by one of these methods.
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Today’s entry…
I thought Florida’s budget had to be balanced? I don’t get the debate about Florida’s budget spending. Wouldn’t it just be whatever they’re able to spend and balance the budget?
Bottom Line: This question’s the result of the news that Governor Ron DeSantis intends to use line item vetoes for state’s budget that passed on Saturday. The final budget came in at $91.1 billion for the year. Governor DeSantis said he wants it under $91 billion. Using line item vetoes isn’t unusual. During Rick Scott’s eight years as governor he vetoed anywhere from $64 million to $615 million. But back to the question about Florida’s balanced budget amendment and how this all ties in together.
It’s true that Florida has a balanced budget amendment. That’s defined by the state not being able to accumulate budget deficits but when it comes to budgeting – we're talking about projections – not absolutes. In other words, the state doesn’t collect money for a year and then spend it in the next. Instead at the start of each year the Florida’s economists and economic advisers hold a “Revenue Estimating Conference” that provides the guidance used by Florida’s government officials as the baseline for spending.
Given that they’re projections, clearly there’s room for errors and economic unknowns during the year that impact revenue. The state legislature always builds in a reserve fund to account for potential shortfalls in revenue. In this year’s budget the reserves were set at $3.4 billion or 3.7% of the entire budget. Governor DeSantis would like to see that number go higher. Here’s his quote on the budget reserves:
“The economy is great. I wish I could say we’re going to have 3.6 unemployment ad infinitum. But I think we just need to prepare ourselves that the economy is cyclical. I hope it’s not next month, next year, three years from now. But eventually things are going to get tighter. We all have to recognize that.”
That's what this is about. It’s clear that in year one, Governor DeSantis wants to error on the side of restraint. Anything above last year’s $88.7 billion represents record spending – so it’s a given that even with some vetoes, we will have record government spending in Florida once again.