State economists project Florida will have a $3.8 billion surplus in the next fiscal year, but that’s followed by shortfalls of $1.5 billion and $6.6 billion in the following years if spending trends from the last three years continue.
The numbers come from the Long-Range Financial Outlook, a document prepared each year by state economists to estimate the future revenues and spending for the next three fiscal years, based on the previous three years’ worth of spending.
The document credits the Legislature’s decision to reduce spending in the current fiscal year that began July 1 with pushing back the shortfalls projected in the previous financial outlook. The current year budget is $114.6 billion after Gov. Ron DeSantis’ vetoes of more than $500 million – about $2 billion less than the prior year.
Last year, the 2026-27 budget year was estimated to produce a $2.5 billion shortfall. Instead, it’s now projected to generate a $3.8 billion surplus.
“Strategic actions taken by the Legislature in the 2025 Session significantly improved the state’s near-term financial position relative to last year’s Outlook,” the document states.
But the increases in spending during the COVID-era, which lingered into the last three years that were part of the span used to determine the future projected spending, still leave lawmakers looking at potential shortfalls of $1.5 billion and $6.6 billion in the 2027-28 and 2028-29 fiscal years, respectively.
Much of the anticipated spending increases come from Medicaid expenditures, K-12 schools and vouchers and the health insurance program for state workers. There’s also the hundreds of millions of dollars lawmakers have set aside for an emergency response fund to help deal with recovery efforts from hurricanes or other disasters.
Combined, those anticipated costs are projected to add $6.8 billion in spending to the budget over the next three years. When other critical and high-priority spending needs are included, it amounts to $20.3 billion in new spending over the next three years.
The outlook comes after a protracted battle over the budget earlier this year between House Speaker Daniel Perez, R-Miami, who wanted more drastic cuts to spending and a cut in the state sales tax, and Senate President Ben Albritton, R-Wauchula, who wanted more moderate cuts, and Gov. Ron DeSantis, who preferred a large property tax cut.
“The House has repeatedly said that state government has a spending problem. The long-range financial outlook reinforces that fact,” Perez said in a released statement. “While we successfully fought to eliminate next year’s shortfall, we are the facing a significant deficit in the out-years. The current level of spending is unsustainable and, in a state as prosperous as Florida, should be unacceptable.”
Lawmakers on the Joint Legislative Budget Commission are expected to meet Sept. 12 to approve the outlook. The Legislature’s next regular session, when lawmakers will craft and pass a budget will begin Jan. 13.
Gray Rohrer is a reporter with the USA TODAY Network-Florida Capital Bureau. He can be reached at grohrer@gannett.com. Follow him on X: @GrayRohrer.
This article originally appeared on Tallahassee Democrat: Florida surplus hits $3.8B, but big deficits loom ahead, state economists say
Reporting by Gray Rohrer, USA TODAY NETWORK – Florida / Tallahassee Democrat
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