(The Center Square) – When state economists lowered fiscal year 2021 revenue estimates in August to reflect COVID-19’s effect, it essentially was an acknowledgement that pre-pandemic economic metrics no longer applied, at least not temporarily.
The General Revenue Fund Financial Outlook Statement adopted Aug. 14 by the Revenue Estimating Conference (REC) forecast Florida’s collections would fall $3.4 billion short of projections this fiscal year and $2 billion shy of estimates next fiscal year.
It also recalibrated and lowered revenue projections going forward to take into consideration the effect of the state’s pandemic-induced economic contraction, creating potential good news and bad news scenarios in the Legislature’s Office of Economic Development and Research’s (OEDR) monthly revenue reports.
The OEDR’s first monthly report based on the revised forecasts was posted Friday and, as anticipated, it’s a half-full, half-empty cup of tallies. The August Revised General Revenue Collections report shows tax collections were up by $177.3 million over revised estimates, but $83.1 million – or 4.6% – below January’s forecast.
Florida is dependent on sales tax revenue, especially revenue generated by tourism, which accounts for nearly $7 billion of the estimated $30.4 billion in sales tax revenue state economists forecast in January.
Each of the six sales tax categories in August came in over new estimates but none gained over August 2019 collections.
“The most significant loss … is declines in the tourism and hospitality-related industries, dropping receipts 41 percent below collections for the tourism category in August 2019,” OEDR reported. “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.”
Senate President Bill Galvano, R-Bradenton, sees good news in August revenue eclipsing REC’s revised forecast.
“Looking ahead, there is good news,” Galvano said in a Friday memo. “This means the new estimates, which were used (by the REC) earlier this month, thus far, are more conservative than actual collections and should provide confidence for planning and budgetary decisions.”
According to the OEDR, collections for 12 of 17 state revenue sources exceeded revised estimates in August by a combined $210.2 million. Among them:
• Sales taxes posted a $153.8 million gain in August over July, “but monthly collections were 5.3% below August 2019.”
• Corporate Income Tax (CIT) collections in August were $10.9 million more than July but 26.8% below August 2019.
• Beverage tax collections in August were $3.3 million more than July but 40% below last August.
Five revenue sources tallied $22.1 million below REC’s revised forecasts. They include:
• Earnings on investments were down $19.1 million in August compared with July and 22.2% below August 2019.
• Highway safety fees were down $1.1 million in August, 24.5% below last August.
“This look in the rear-view mirror at the January estimate provides an important insight,” Galvano said, noting the “most significant loss to sales tax collections from that estimate continues to be for the tourism category.”
Galvano, who is term-limited and will be succeeded as Senate president by Sen. Wilton Simpson, R-Spring Hill, on Nov. 17, said the numbers outline the Florida Legislature’s 2021 priorities.
“It is imperative, for the survival of these businesses and the jobs they create, that we continue to work toward the safe return and recovery of the tourism industry, including encouraging the safe enjoyment of these establishments by Floridians,” he said.