Florida Economist To Lawmakers: Strong Growth Not Enough To Cover Budget Deficit Caused By COVID-19
Florida lawmakers return to Tallahassee in March facing at least a $2 billion budget shortfall. And that’s despite an infusion of more than $6 billion in federal money aimed at helping the state weather the coronavirus pandemic.
Florida leaders have known the state’s financial picture would be bad—the warnings were clear back in August when the two-year outlook plunged from a growth trend, to a negative of $5.4 billion. It’s gotten better, since then. Now, Florida appears to be only $3.3 billion in the hole. That’s bad, but not AS bad.
“When we came back in December…the picture had improved, and we were able to restore, between this year and next, $2.4 billion," Florida chief economist Amy Baker told the Senate's Appropriations Committee last week. "The bulk of that [increased revenue] was a result of this summer, with sales tax collections, doc stamps [increasing]," she said.
When Baker speaks, lawmakers listen, as they did when she gave an overview into how various parts of the state’s economy are doing.
“We do have growth, in fact, very strong growth…largely, that’s tourism starting to come back. The question is, if you have some very strong growth rates, what’s the problem?" said Baker.
As has been the case now for more than a year, there's always a catch.
"We went so low [in terms of revenue] in 2019-2020…that even with strong growth rates…you don’t get back to where you where were.”
There are a lot of headwinds Florida is facing ahead of the next fiscal year. And they're all caused by the COVID-19 pandemic. It's a situation that's getting worse, as infection rates spike.
“We’re in a period of resurgence [in infections]," Baker said. "You’re almost certainly going to lose more money as we move through the course of this year.”
Consumers are nervous about spending, and tourism, the state’s biggest industry, also isn’t expected to get back to pre-pandemic levels for at least three years. Healthcare funding is Florida’s biggest spend, and the Medicaid program for low-income Floridians has seen its enrollment surge as people lost their jobs, and therefore, their private health insurance.
“We know from the estimating conferences that Medicaid costs…are a lot higher. The caseload is a lot higher, the expenditures are a lot higher…about $700 million higher, "Baker told lawmakers.
All of this factors into Florida’s spending. The state received $6 billion dollars from the federal government last year to help cover the costs of the pandemic. And some lawmakers, like Dania Beach Democratic Rep. Steve Joe Geller, are hoping for more.
“Obviously we don’t know how much it would be…how much would it need to be for us to be looking at a substantially improved picture?” Geller asked of House Appropriations Chairman Jay Trumbull, R-Panama City.
“I think it’s incumbent on this body to make decisions on our fiscal health as it relates to today, without any understanding of whether congress is going to give extra money, because in reality, we don’t know," Trumbull responded.
Baker, the economist, says Florida’s been lucky when it comes to having the financial means to weather the pandemic. But that luck is running out.
“We’ve had a huge federal infusion of dollars that we would not expect to continue next year," she said. "So those dollars that have been benefitting our outlook are being spent and have been spent, and won’t be refilled as we go into next year. That’ll be coming out of our forecast.”
Senate President Wilton Simpson and House Speaker Chris Sprowls have already signaled they’re prepared to deal with less money. Simpson has noted cuts to education and healthcare—the two largest spending items, are likely. Leadership is also looking for new ways to raise money—eyeing the first tuition increases at public colleges and universities in nearly a decade, and closing some online sales tax loopholes. Senate Appropriations Chairwoman Kelli Stargel notes the decisions lawmakers face will be hard.
“What is the core function of government? What do we need to be providing to our citizens? We need to make sure we are providing that, and then make sure we have a buffer for the future unknowns that we really do not know," said Stargel.
Budget cutting is never fun. Other possibilities include waiving late fees in order to get more people to pay their property taxes.
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