(The Center Square) – Florida economists will meet in a dozen revenue estimating conferences, and numerous other education and healthcare-related budgetary reviews, before issuing a new composite fiscal year 2021 revenue forecast on Aug. 14.
That revised projection could have significant implications for the $92.2 billion fiscal 2021 budget that Gov. Ron DeSantis cut $1 billion from on June 29, two days before it went into effect on July 1 and three months after it was adopted by lawmakers.
REC’s revised estimates could prompt the governor and state Legislature to reassess components of the spending plan, perhaps in a special session.
Moody’s Analytics in April estimated that business shutdowns and expenditures related to the pandemic could engender an $8 billion to $10 billion shortfall in the state’s fiscal 2021 budget.
While state economists ponder and project what could unfold in the new fiscal year, the state’s Office of Economic & Demographic Research’s (OEDR) June Revenue Report indicates Florida ended fiscal 2020 on June 30 with a $1.9 billion gap between January revenue estimates and actual annual collections, a 5.7-percent decline in projected General Fund revenues for the last six months of the year.
According to the OEDR, through March, the state had raised $202.4 million more than anticipated in January. But that surplus was consumed over the last quarter of the fiscal year.
“Over the next three months (April, May and June, the last quarter of the state’s fiscal year) the Coronavirus impact began to materialize, with a total loss for the quarter of nearly $2.1 billion across all sources,” OEDR said Monday in its June Revenue Report.
Most of the decline in projected revenues, $1.45 billion, occurred between March and May, according to the OEDR, with April accounting for 42.1 percent of the total “lost” revenues.
As expected, revenue losses are manifested primarily in declining sales tax collections.
Of the total loss in projected revenues, 84.7 percent came from a 6.1 percent decline in sales tax collections.
Florida is heavily dependent on sales tax revenues, especially those generated by tourism, which accounts for nearly $7 billion of the estimated $30.4 billion in sales tax revenues state economists forecast in January. Florida does not assess a personal income tax.
“As the pandemic took hold, sales tax collections plunged, falling by just over $1.6 billion from the estimate for the quarter,” OEDR states. “Following a slightly different pattern, the greatest loss for the three-month period occurred in May with 42.9 percent of the pandemic-related sales tax loss for the year.”
April accrued a 36.9 percent sales tax “loss,” and June 20.2 percent, according to the report.
“A large part of the loss over the quarter is attributed to declines in the tourism and hospitality-related industries, but the impact was widespread as all categories other than building-related industries were affected,” the OEDR said.
The OEDR report identified four state revenue sources that posted a combined loss in projected revenues of $52 million for the quarter and a composite total loss for the year of $16.7 million They include:
Documentary Stamp Tax paid on real estate transactions were $32.6 million below projections for the last quarter of the fiscal year, ending $400,000 below pre-pandemic projections for the year.
Article V Fees and Transfers ended the year $10.2 million under the annual estimate after a decline of $10.6 million in last-quarter revenues.
Beverage taxes were $7.6 million below last-quarter estimates and finished the year $3.6 million shy of January’s estimate.
Pari-mutuel taxes were $1.2 million below quarter estimates and finished the year $2.5 million under the annual estimate.