Florida to bring in more tax revenue than anticipated
As they piece together a new spending plan, state lawmakers can anticipate $2 billion more in tax revenue than previously forecast, months after facing the prospects of a major budget shortfall.
But while economists increased general-revenue estimates Tuesday, the state still faces financial fallout from the COVID-19 pandemic such as an increase in Medicaid caseloads and the potential that tourism, particularly from overseas travelers, might not return to “normal” levels until the 2022-2023 fiscal year.
Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said the state has been “very fortunate” with developments such as a huge influx of federal money.
“So, a lot of good things have helped us stay in a very healthy financial position,” Baker said. “But most of those things are non-recurring. So, they (lawmakers) still have to face the challenge of dealing with the recurring nature of the budget going forward.”
Senate President Wilton Simpson, R-Trilby, was also cautious, while praising Gov. Ron DeSantis for the improved economic outlook.
“While encouraging, there is still reason to be cautious. We know estimates can, and often do, change without much notice,” Simpson said in a statement. “One thing is for sure, our governor deserves a lot of credit for today’s good news. Under his leadership Florida is in much better shape than we ever thought possible one year ago when we were just starting to get to work on the reopening task forces (that helped address pandemic economic issues).”
House Speaker Chris Sprowls, R-Palm Harbor, pointed to budget negotiations that will play out this month.
“While we are encouraged by the revised general revenue estimate, we remain resolute to make wise, fiscally conservative decisions with Florida taxpayer dollars,” Sprowls said in a statement. “As we move into budget conversations with our Senate partners, we will be mindful of this positive news and work together to ensure that our future is secure.”
In August, as Florida was still in the second phase of DeSantis’ economic recovery effort, economists reduced overall estimates of general revenue for this fiscal year by $3.42 billion and for next year by nearly $2 billion. In December, economists added back a combined amount of about $2.1 billion for the two years.
In the latest forecast by a panel known as the Revenue Estimating Conference, revenues were revised upward by $1.475 billion for the current fiscal year and $550.8 million for the fiscal year that begins July 1.
“The difference between the two years … reflects the fact that much of the gain in the current year reflects a faster than expected recovery without materially changing expectations for future years,” Baker said.
The biggest economic bump is coming from sales taxes, growing by $875.5 million over the prior forecast for the current fiscal year, and by $331 million for next fiscal year. Baker attributed a quicker pace of recovery in the current year to widespread distribution of COVID-19 vaccines that occurred faster than anticipated.
The new estimates involve state general revenue, which plays a critical role in funding schools, health care and prisons. Meanwhile, the state is expected to receive about $10 billion from the recently approved $1.9 trillion federal American Rescue Plan Act.
The House is slated Wednesday to take up an initial $97 billion budget (HB 5001) that already factors in federal stimulus money. The House would like the money to be used for things such as long-delayed building maintenance, upgrading the state’s unemployment system and creating a new emergency reserve in the governor’s office.
The Senate’s initial $95 billion proposal (SB 2500) didn’t factor in the federal dollars. Simpson has said as federal money rolls in --- he doesn’t expect a one-time $10 billion payment from the U.S. Treasury --- it should be divided between road and water infrastructure-type projects and reserves.
The new estimates of general revenue also are expected to give House and Senate leaders more money to spread around as they enter negotiations on a final spending plan.
In a conference call Monday with reporters, House Minority Co-leader Evan Jenne, D-Dania Beach, said the initial House budget wouldn’t do enough for working-class Floridians. He pointed, for example, to a proposal to shift money away from affordable housing programs.
“You’re talking about raiding the affordable housing funds in order to pay for environmental concerns,” Jenne said. “If we’re ever going to do right by affordable housing and pay for climate change concerns, we have to have dedicated money going to both those things.”
While in Panama City on Tuesday, DeSantis encouraged House Appropriations Chairman Jay Trumbull, R-Panama City, to get his “money’s worth” in using the federal stimulus dollars for infrastructure work still needed in Northwest Florida after Hurricane Michael in October 2018.
DeSantis, who spoke as state economists were meeting, said he expected Florida to have “so much more revenue than anyone was forecasting.”
“I think that's a function of the fact Florida's open. People have the right to work. Businesses have a right to operate. Kids are in school. And we're helping to lead the way,” DeSantis said. “So, I think that we're going to be able to do a lot of good stuff, as a result of the underlying health of the state relative to all these other states.”
State revenue has come in $1.185 billion, or 5.1 percent, higher than forecast for the first quarter of this calendar year, with sales-tax collections $778 million, or 4.2 percent, over the projection for the quarter.
Among other components of general revenue, corporate income taxes are 9.6 percent higher than forecast and documentary stamp taxes, which are collected on real-estate transactions, are 14.4 percent higher than forecast.