Initial, positive indications about Florida’s budget for the coming fiscal year could be overtaken by events if the Florida Supreme Court strikes down changes to state employees or the nation plunges over the fiscal cliff, the state’s top economist warned Wednesday.
Speaking to the first meeting of the Senate Appropriations Committee, Amy Baker — coordinator of the Legislature’s Office of Economic and Demographic Research — told lawmakers that the current projection of a $436.8 million budget surplus could still change.
“I think the message is that this is not a large cushion,” Baker said. “It could evaporate on you if economic circumstances turn against us.”
Lawmakers have long watched a decision in the case challenging a 2011 law that required employees to contribute 3 percent of their income to their retirement funds, along with other changes. It could cost the state around $2 billion if the Supreme Court strikes down the law.
A Leon County circuit court judge voided the changes for employees hired before July 1, 2011; justices seemed hesitant about upholding that ruling at oral arguments earlier this year.
But Baker said the so-called “fiscal cliff,” a package of federal spending cuts and tax increases set to take effect on Jan. 1 unless Congress and President Barack Obama can reach agreement, also looms large.
If there is a long delay in reaching a deal — one that stretches past January and into March — it could cost the state as much as $375 million, Baker said, comparing it to the debt-ceiling fight in August 2011 that dragged down the state economy.