Florida's revenue cliff: $5B over two years

 

BY MATT DIXON

|09/10/2020 06:47 PM EDT

 

TALLAHASSEE — Florida lawmakers are staring down the prospect of a $5.4 billion drop in revenue over the next two years, a massive slump prompted by the state’s sales tax-driven economy shutting down in the wake of the coronavirus pandemic.

 

Amy Baker, the legislature’s top economist, delivered the bad — though expected — news to a panel of House and Senate budget-writers Thursday as part of an annual presentation of the state’s three-year revenue forecast, an otherwise routine affair now fraught with concern about the fallout of Covid-19.

“The situation we are dealing with in the state with the budget is really unprecedented,” said Senate Appropriations Chair Rob Bradley, a Fleming Island Republican who ran the meeting. “The set of circumstances and the challenges that we are facing are unusual. We have not seen them before.”

The dire revenue picture comes as lawmakers prepare for the 2021 legislative session, which could start having preliminary meetings as soon as mid-November.

Headed into session, it’s expected that lawmakers will be looking at a $2.8 billion budget gap, a stark departure from the post-Great Recession years that have largely brought Florida budget surpluses.

Bradley and House Appropriations Chair Travis Cummings (R-Orange Park) are facing term limits, leaving the budget mess to a new crop of Appropriations chairs. That will likely fall to state Rep. Jay Trumbull, a Panama City Republican incoming House Speaker Chris Sprowls is likely to tap as budget chair.

Trumbull told POLITICO in an interview Thursday that he thinks Gov. Ron DeSantis has done a good job to date pushing to reopen the economy where he could, but says he is aware he is likely to inherit a mess.

“We have done a good job as a state, you know, with policies to make sure we are not in as tough a spot as other states,” he said. “But the numbers are what they are.”

The pandemic-driven economic implosion has ushered in both a collapse of state revenues and a spike in Florida’s unemployment rate, which now sits at roughly 11 percent. It has stressed the state’s jobless system infrastructure, which caved under a wave of coronavirus-prompted jobless claims that left thousands of desperate Floridians cut off from state assistance.

Baker said the state’s unemployment rate will tick down starting next fiscal year, but things will not bounce back quickly.

“We expect the unemployment rate to peak early in fiscal year 2021, and then gradually start to be dropping,” she told lawmakers.

The state’s revenue picture has been boosted by nearly $6 billion in federal funding through the CARES Act, a stimulus law designed to help states offset coronavirus-related costs, though there have been questions about how states can use the money, and what qualifies as a permissible expense.

Baker said that as Congress mulls another stimulus package, flexibility in how the state can use those federal funds is as important as getting another infusion of cash. The state would like more flexibility than the first round, which had a rigid focus on specific coronavirus-related costs.

State Sen. Oscar Braynon (D-Miami Gardens), raised questions about how Florida has spent CARES Act funding, a process so far entirely controlled by DeSantis’ office because of a coronavirus executive order he signed in April. Lawmakers have largely been elbowed out of the process on how to spend the funds, which has been a point of contention for Democrats but supported by the Legislature’s Republican majority.

“When you’re dealing with once-in-a-lifetime events … it’s entirely appropriate for the executive, whatever party they are from or whoever they are, to take the lead,” said Bradley, the Appropriations chair.