Some economists and policy institutes have raised red flags about Florida’s ability to weather the coronavirus crisis financially, given the state’s lack of a state income tax and other fiscal restrictions.
Policy observers contacted by the Florida Record, however, gave the state legislature high marks for its budget deliberations, which last month produced a $93.2 billion spending blueprint.
“Florida’s economy will undoubtedly take a hit, and with it the revenues the state has to work with,” Sal Nuzzo, vice president of policy at the James Madison Institute in Tallahassee, said in an email. “We generate roughly $500 million every month from tourism tax revenue, and every penny of that is at risk for the duration of the pandemic response.”
The anticipated decline in revenues due to the pandemic will likely be felt by programs outlined in the state government, Nuzzo said.
“In addition, with a good portion of state revenue coming from sales tax receipts, as the economy slows down I expect we will see this also bear its weight on our budget,” he said.
But the state does have a number of positive attributes that will help it navigate a fiscal crunch, according to Nuzzo.
“Our leaders both in the legislature and the Governor’s Office have done exceptional work over the past 10 years to put Florida in a place fiscally where we have healthy reserves, very little debt, a lean budget and a positive mentality that will absolutely help the state through this,” he said.
A spokesman for Florida TaxWatch noted in an email that the nonprofit institute had called on the legislature to make cuts to individual lawmakers’ projects to preserve funding in the fiscal-year 2020-2021 budget in the wake of the coronavirus situation.
“As the attention of our leaders rightfully turns to the state response to the coronavirus pandemic, we trust that Gov. (Ron) DeSantis will use his veto pen judiciously and be mindful of the potential need for even more funding to be available to fight this illness and keep Floridians safe,” TaxWatch President and CEO Dominic Calabro said in a prepared statement.
Florida should receive an allocation of about $8.3 billion from the recently approved federal CARES Act, which provided $2.2 trillion to help Americans cope with the economic costs associated with the Covid-19 outbreak, according to a TaxWatch report. Out of those funds, local governments in Florida may receive as much as $3.7 billion, the report said.
“Along with the $3.8 billion in state reserves, the state appears to be in good shape for Covid-related costs,” the March 26 report states. “However, if the expected drop in Florida tax revenue occurs, the state will still be short of paying for other costs that the federal bill will not cover.”