Florida's September tax revenues offer a mixed picture
Florida had a second consecutive month of better-than-expected revenue numbers in September, but tax collections continue to reflect the economic damage caused by the coronavirus pandemic.
State economists released a report Tuesday that said general revenue for September was $230.2 million above a revised estimate issued in August.
However, the report highlighted the continued struggles of the state’s vital leisure and hospitality industries, as the September total marked a 6.8 percent decline in tax collections from the same month in 2019.
The report by the Legislature’s Office of Economic & Demographic Research also noted that the September total would have been $145.8 million below an earlier forecast amount if estimates had not been revised in August because of the pandemic.
“Even with this favorable outcome, the September results continue to reflect the significant economic loss wrought by the pandemic; against the old forecast, the revenue loss would have been $145.8 million,” the report said. “Given the nature of the fiscal shock, comparisons to the same month in the prior year produce the most meaningful metrics. In this respect, overall collections in September 2020 are down 6.8 percent from September 2019.”
The figures came after an estimated 770,000 Floridians were out of work in September and as lawmakers look at a potential budget shortfall of about $2.7 billion for the 2021-2022 fiscal year and $1.9 billion for the following budget year.
Outgoing Senate President Bill Galvano, R-Bradenton, expressed optimism in a memo to senators Tuesday “because of the positive news in this report.”
“Many Florida families are still struggling with pandemic-related unemployment or underemployment caused by closures or reduction in services and capacity within certain portions of our economy,” Galvano wrote in the memo. “However, these numbers indicate that in recent weeks others have regained confidence in our economy and are beginning to resume more normal spending habits, easing off what had been an atypically high savings rate when larger portions of the economy were closed or restricted.”
Democrats for months have requested a special legislative session to address the economic impact of the pandemic. Republican leaders in Tallahassee have maintained that expanded budget reserves approved during this year’s legislative session, along with $1 billion in cash-conserving vetoes by Gov. Ron DeSantis, have prevented the need to call lawmakers back to Tallahassee.
Incoming House Speaker Chris Sprowls, R-Palm Harbor, expressed a need to remain calm about the new monthly numbers.
“We’ve said for months now that we need to be cautious, look at the data and avoid overreacting to any one month’s numbers,” said Sprowls, who will become speaker after the Nov. 3 elections. “That same principle continues to apply. Because I have faith in Florida’s entrepreneurs and workers, I remain cautiously optimistic. Either way, the Legislature will be prepared to make responsible, conservative fiscal decisions.”
Outgoing Senate Minority Leader Audrey Gibson, D-Jacksonville, said despite the “rosy” picture offered by Galvano, “our revenues are still down, and the shortfall will have to be made up somewhere in order to pay for the government services and programs Floridians depend on.”
“The most critical point in this outlook is the acknowledgement that the pandemic is the cause of this economic mayhem,” Gibson said. “With much of our economy based in the hospitality and tourism industries, people remain afraid of a virus that is still running free in our state, and it shows in the layoff numbers.”
The revised August forecast estimated that Florida would collect $2.44 billion in general-revenue taxes in September. The report released Tuesday showed an actual amount of $2.67 billion.
The September numbers follow August revenues coming in $177.3 million above the revised forecast. However, the August figure was also down 4.6 percent from collections in August 2019 and $83.1 million below a pre-pandemic projection.
“The most significant over-the-year loss is attributed to declines in the tourism and hospitality-related industries, dropping receipts 28.2 percent below collections for the tourism category in September 2019,” the economists’ report said. “Even though a significant part of the loss arises from a reduction in the number of out-of-state tourists, this category also includes sales to Florida residents at restaurants, local attractions and other leisure-based activities which have likewise been negatively affected by the pandemic.”
The economists’ report said increases in spending in September show “pent-up demand and some consumers’ ability to draw down atypically large savings that built up during the pandemic.”
Some areas of the report were bright spots. Intangible taxes were up $17.7 million in September from the revised estimate and were 72.5 percent higher than a year ago. Documentary stamps on real estate sales were up $5.1 million and 18.5 percent above the September 2019 mark. And corporate filing fees were up $6 million, or 33.3 percent more than a year ago.
But in several areas, collections — while up from the revised forecast — were down from a year ago.
For example, sales taxes, which draw heavily on the tourism and hospitality industries and are a key component of general revenue, were $121.7 million above the forecast but down 3.4 percent from the September 2019 amount.
Similarly, corporate income-tax collections were up $93.1 million from the forecast but were 24.6 percent less than in September 2019.