Irma took out Florida's projected budget surplus, economist says

By Troy Kinsey, Capitol Bureau Reporter
Last Updated: Friday, September 15, 2017, 9:50 PM EDT

The slim surplus Florida lawmakers had been counting on to underpin their spending plan for the 2018-19 fiscal year has been wiped away by Hurricane Irma, the legislature's chief economist told a joint budget panel Friday.

  • Florida expected $52 million budget surplus 
  • State economists believe Irma will take out that surplus
  • Irma's costs may fall between $25 billion and $46 billion

With the storm's initial recovery costs already topping more than a quarter-billion dollars, the economist, Amy Baker, said the $52 million surplus her office had been preparing to forecast is no longer realistic.

"It is clear that Hurricane Irma, or black swan, is going to be affecting the outlook," Baker told members of the Legislative Budget Commission.

Baker estimated that Irma's costs could fall somewhere between those of Hurricane Wilma (2005) and Hurricane Andrew (1992) which, when adjusted for inflation, would total $25 billion and $46 billion, respectively.

"It's going to make fiscal year '18-'19, the first year of the outlook, that looked good and bearable, much worse," she warned.

The change of fortune could all but doom Gov. Rick Scott's 2018 legislative agenda, which had been expected to be heavy on tax cut proposals. Without a surplus to pay for them, any discussion of a final round of tax cuts before Scott leaves office has effectively been silenced.

And depending on the severity of the recovery costs, lawmakers could be forced to make some particularly draconian choices in order to put Florida's fiscal house in order. Those choices include tapping reserve accounts, cutting spending on everything from education to health care, and raising taxes.

"I don't feel much better about this forecast than I did about the forecast I was watching this time last week," said Sen. Bill Galvano (R-Bradenton), the chairman of the Senate's higher education committee.

There is potential for an Irma recovery building boom to take shape, much like the boom that occurred in the aftermath of the 2004-05 hurricanes, and fill state coffers with increased sales tax collections. An initial hit to the tourism industry, however, could dull any stimulative budgetary benefits.

"We may feel the positives for a certain period, and then when you average it out over the long term, and so, it may mitigate the negative because it's rising and balancing, but it's not something we should bank on," Galvano said.