Florida Tax Revenues Get $2.6 Billion Boost
A summary from the economists Tuesday noted that the revisions put overall estimated general-revenue collections above pre-pandemic forecasts by about $1.2 billion for this fiscal year and $1.2 billion for next year. About half of the difference is attributed to revenues from the new Seminole gambling deal and online sales-tax dollars, the summary said.
Florida lawmakers will have an additional $2.6 billion to play with in general-revenue taxes, along with nearly $6 billion in unspent federal coronavirus stimulus money, as they begin to piece together an election-year budget.
While acknowledging uncertainty about the effects of the delta variant of the coronavirus on the economy, a state panel on Tuesday boosted estimates of general-revenue tax collections for the current fiscal year and the 2022-2023 fiscal year. The estimates include new sales-tax collections from out-of-state online retailers and money from a gambling deal with the Seminole Tribe --- both issues that passed the Legislature this year.
Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said the state’s economy during the past quarter has been “kind of hyper-charged,” returning to what could be considered a pre-pandemic normal in April, three months ahead of schedule.
“The picture has been evolving a lot, including the reaction to the stimulus dollars was much stronger and much quicker than people expected it to be,” said Baker, referring to federal spending that poured money into the economy.
Senate President Wilton Simpson, R-Trilby, said it’s “always good to have positive news,” but he remained cautious about the new estimates because of the delta variant and current unemployment levels. The delta variant in recent weeks has caused a spike in COVID-19 cases and hospitalizations in the state.
Lawmakers will draw up the 2022-2023 budget during a session that starts in January, before heading home to prepare for the November 2022 elections.
“We are still a pretty long way away from the bulk of the work in preparing a budget for fiscal year 2022-23, and history tells us that a lot can change between now and then, but still I think we have reason to be optimistic that our economy will continue this strong rebound,” Simpson said in a statement.
Simpson noted Tuesday’s numbers will be used in putting together what is known as a “Long Range Financial Outlook” that helps guide legislative budget decisions. The outlook will be finalized before pre-session committee meetings begin in September.
A panel of economists known as the Revenue Estimating Conference meets periodically during the year to update estimates of general revenue, a key source of money for schools, health programs and prisons.
Tuesday’s boost in the estimates came after what some considered conservative forecasts as the state grappled with the COVID-19 pandemic. “Maybe too conservative,” said Holger Ciupalo, policy coordinator for the governor’s Office of Policy and Budget.
Still, economists anticipate an eventual slowing, but not a reversing, of the current economic direction.
“We know people had more money to spend on goods, because they weren't able to spend on services,” Baker said of spending habits at the start of the pandemic. “The big challenge for us today was trying to figure out over the course of this year is, when does that shift back to normal occur and how smooth will that be?”
Baker noted national retail sales are up about 9.5 percent from a year ago, yet the National Retail Federation on Tuesday reported numbers were down 1.1 percent in July from June. The industry group pointed to retailers facing supply-chain disruptions and consumers shifting some spending from goods to activities like dining out and traveling.
The new forecast increased by about $1.4 billion estimated revenue for the current fiscal year, which will end June 30. It also increased the revenue projection for the 2022-2023 fiscal year by about $1.2 billion.
The state, however, also faces cautionary issues such as increasing numbers of people enrolled in the Medicaid program, the resurgence of COVID-19 because of the delta variant and a tourism industry that is heavily reliant on U.S. travelers while awaiting a return of international visitors.
"You don't know if (the delta variant) is going to cause more budget amendments, that would reduce how much money is available in the (financial) outlook," Baker said. "We don't know how bad it will be or how long it will last, so, we don't know how people will respond. There's some belief that a number of people are already going back to their online shopping behaviors.”
A year ago, as Florida was still in the second phase of Gov. Ron DeSantis’ economic recovery effort amid the pandemic, economists reduced general revenue estimates by nearly $5.42 billion. By December, about $2.1 billion was added back into the forecast. In April, another $2 billion was added to the forecast.