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General Revenue Estimates for the Current Budget Year Reduced by $3.4 Billion

After 128 months of economic expansion through February 2020, the global coronavirus pandemic brought on the largest post-war contraction in U.S. history. With the resulting closure or slowdown of businesses, record unemployment, and a loss of tourism, Florida’s economy is suffering. The impact on government revenue has been and will continue to be profound. The General Revenue Estimating Conference met on August 14 and reduced the revenue projections by $3.420 billion in the current budget year and $1.994 billion in FY2021-22. This follows news that actual collections in FY2019-20 fell $1.9 billion short of the estimate. 

Losses in sales taxes account for most of the decreased estimates. The sales tax estimate was reduced by $2.844 billion in FY2020-21 and $1.251 billion next year. Decreased tourism, falling sales for restaurants, attractions and other leisure services, and a record savings rate all contributed to the loss. While all sales tax sectors were revised downward, tourism and recreation accounted for most of the revenue loss. The sector’s estimate was reduced by $1.731 billion (26.0 percent) in FY2020-21 and by $711 million (10.3 percent) next year.

The second biggest loss in the forecast is in corporate income taxes. Reduced profitability, business failures, and delayed business formations led to projections being reduced by a total of $1.156 billion over the two years. 

The new sales tax revenue data also has direct implications for local governments, because Florida shares part of the 6 percent state sales tax with cities and counties. Local distributions in the current year were reduced by $354.1 million and by $169.1 million next year. Local governments will also see significant losses in local option sales tax collections. 

Only three sources had their estimates increased, two of them related to real estate activity (see table 2). Documentary stamp taxes were increased by $56.8 million and intangibles taxes by $56.7 over two year. Tobacco taxes saw a small increase of $3.9 million. 

Despite these dismal projections, Florida is not facing a deficit in the current budget year—at least on paper. The state has deposited $5.856 billion in federal money from the CARES Act into the General Revenue Fund. The result in an estimated surplus in this budget year of $1.367 billion; however, the CARES act funds included $1.275 billion in funds for local governments. The state has only disbursed $318.8 billion, meaning approximately $950 million still needs to be distributed to cities and counties. This would reduce the surplus to just over $400 million. Florida is going to have to be able to use all the CARES money to replace GR spending (highly uncertain) and not incur significant new virus-related expenses to avoid a deficit, without taking additional budgetary measures.

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