‘Worse than feared’: Florida takes $880M coronavirus hit
By Matt Dixon
05/26/2020 06:32 PM EDT
TALLAHASSEE — Florida missed revenue projections by nearly $880 million in April as the coronavirus outbreak dealt a crippling blow to the state’s tourism-dependent economy, according to a revenue report that provided the first clear picture of the cost of pandemic-related shutdowns.
The numbers, released Tuesday by the Office of Economic and Demographic Research, coupled with Florida’s 13 percent unemployment rate, reveal the staggering economic impact of the Covid-19 outbreak in a politically crucial state that could determine whether President Donald Trump wins a second term.
And Congress and the president currently are debating whether to ship financial aid to states whose budgets are hemorrhaging from coronavirus shutdowns, sparking a red-versus-blue state divide.
The shortfall — April revenue was nearly 30 percent less than forecast — will have economic and political consequences for Tallahassee as well. State lawmakers are hoping the state’s rainy day fund will help bolster its bottom line, but that pot of cash also is at risk of drying up.
Gov. Ron DeSantis and the Republican-led Legislature must decide whether to return to the Capitol to rework the current budget and next year’s fiscal year spending plan, which DeSantis has yet to sign into law. Any rejiggering would come with a host of policy considerations.
The bad news wasn’t unexpected. Florida’s economy depends on tourism, an industry that has been shut down over the past two months because of coronavirus restrictions.
More than 70 percent of Florida general revenue is derived from sales taxes, which fell short of forecasts by $598.2 million. Corporate income tax collections missed the mark by $246 million.
“A large part of this loss is attributed to declines in tourism and hospitality-related industries, as well as auto sales,” the Office of Economic and Demographic Research reported.
With major international tourism magnets like Walt Disney World and Universal Studios closed, state beaches reopening only this month and sporting events put on hold, there was an inevitability to the bleak revenue picture, but the numbers published Tuesday still shocked.
“The most recent revenue projections are even worse than feared,” said incoming Senate Minority Leader Gary Farmer. “If we assume extended reductions, even if a fraction of April, we are looking at possibly a $10 billion revenue shortfall if not more.”
Senate President Bill Galvano, a Republican, said the Legislature’s ability to navigate the shortfall will require “deliberate, professional, fact-based decision making.”
“The situation continues to evolve on a daily basis and additional data in the coming weeks will be critical,” he wrote in a memo to members.
Republicans who control most levers of state government have brushed off the idea of a coronavirus special session in the near term, saying the state’s projected $4 billion rainy day fund and another $4.6 billion in federal stimulus delivered through the CARES Act would float the state until the end of the fiscal year on June 30.
The state reserve fund for next fiscal year is an estimate based on an assumed level of excess revenue that will roll into next year. That pot of money, however, has taken a hit.
Galvano has said a special legislative session isn’t needed to address the current year budget, but one could be needed after the July 1 start of the 2020-21 fiscal year.
“His thoughts have not changed based on this report,” Galvano spokesperson Katie Betta told POLITICO Tuesday. Additional reports over the next few weeks, she said, “will be very important.”
Galvano wants “further clarification” on whether CARES Act money can be used to offset revenue losses related to the economic shutdown, or spent only on direct costs tied to fighting the pandemic, Betta said.
DeSantis spokesperson Helen Aguirre Ferré, in a written statement, said it was too soon to determine the full revenue impact of the pandemic.
House speaker Jose Oliva did not respond to a request for comment.
The state has spent hundreds of millions of dollars through budget amendments to pay for critical needs such as personal protective equipment.
Record unemployment has pushed the expense of jobless benefits to $3.5 billion. And the Agency for Health Care Administration estimates state Medicare costs could jump by $1 billion due to the pandemic, a number first reported by the News Service of Florida.
Democrats forced a vote on holding a coronavirus special session, but came up short. They had proposed a three-pronged agenda that included speeding up unemployment claims processing, steps toward full vote-by-mail elections and an examination of state revenue.
“These numbers reflect what my Democratic colleagues and I have been saying for weeks: Florida must convene a special session immediately and get to work for the people of our state,” Farmer said.
Congress has been mulling whether to help bolster state bottom lines, but the debate has devolved into a partisan slugfest.
Republican Florida Sen. Rick Scott has been one of the leading voices pushing back on the idea of a “blue state bailout,” and using New York Gov. Andrew Cuomo as his Democratic foil.
“Low-tax policies and sound fiscal management work,” Scott wrote in a letter to the New York Times this month. “It’s not fair to Florida citizens to send their tax dollars to bail out liberal politicians in states like New York for their unwillingness to make tough and responsible choices.”
In his memo, Galvano agreed that there are “many concerns” with the federal government bailing out states that have had “decades of state mismanagement unrelated to COVID-19.”
“Doing so would not only increase our already significant federal deficit, but would incentivize bad-actor states to become more reliant on federal taxpayers to the detriment of states like Florida,” he wrote.
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