Florida TaxWatch Recommends State Budget Cuts As Coronavirus Hits Revenues
Florida TaxWatch wants more than $136 million in projects cut from the proposed state budget, but the fiscal-watchdog group acknowledges that might be far less than what is needed because of the coronavirus pandemic’s impact on state revenues.
TaxWatch President Dominic Calabro said he expects Gov. Ron DeSantis to use his line-item veto power to go beyond the 180 projects that TaxWatch has identified as “turkeys” in the proposed $93.2 billion budget that lawmakers passed in March.
“I think the governor is going to veto a very big amount, and that’s fine,” Calabro said Thursday. “Our turkey list is just very specific and very limited. They know it and we know it.”
Lawmakers have not formally sent the budget to DeSantis. But with the new fiscal year starting July 1, the spending plan will have to go to the governor this month.
The nonprofit TaxWatch’s turkey list recommends vetoes mostly because of the way projects were put into the budget, rather than based on the projects’ merits. The group, for example, targets projects that received a lack of public review.
But DeSantis could look to veto large amounts of spending to conserve cash, as tax revenues have plummeted during the pandemic. As an indication of continuing economic problems, the U.S. Department of Labor on Thursday released a report that estimated 110,520 new unemployment claims were filed in Florida last week.
Also, Florida Chamber Foundation Chief Economist Jerry Parrish warned that leisure and hospitality jobs may struggle to return through the end of the year.
“Certainly, the visitors from other states and other countries, you know, which we certainly depend on for tax revenue, that's going to be lighter,” Parrish told the Enterprise Florida Board of Directors on Thursday.
A late May report from the Legislature’s Office of Economic & Demographic Research said revenue collections in April were more than $878 million below estimates, with a large chunk of the drop due to the decline in tourism.
Calabro, in announcing his group’s budget hit list, said federal stimulus funding should help offset economic impacts in the current year. But he expects lawmakers will have to return to Tallahassee to readdress spending for the fiscal year that starts July 1.
Concerns have been raised that DeSantis might have to cut planned increases in teacher salaries or trim spending on programs such as Florida Forever. DeSantis has made a priority of teacher pay hikes and spending on environmental issues.
Rather than making such cuts, Calabro suggested lawmakers require the collection of sales taxes on all goods purchased online by Floridians. Also, he called for reaching a new gambling deal with the Seminole Tribe of Florida.
Lawmakers have repeatedly considered --- and rejected --- proposals aimed at boosting the collection of sales taxes on goods purchased online. While businesses with physical presences in Florida collect and remit such taxes, out-of-state retailers often do not.
Collecting the taxes has long been backed by groups such as Associated Industries of Florida, the Florida Chamber of Commerce and the Florida Retail Federation, which say Florida retailers are put at a disadvantage when out-of-state businesses don’t collect sales taxes on online purchases.
The state Revenue Estimating Conference projected in January that such legislation would generate $479 million a year in currently uncollected revenue for the state and another $132.9 million a year for local governments.
Also, lawmakers during the past couple of years have unsuccessfully grappled with trying to reach a new gambling deal with the Seminole Tribe that could pump more money into the budget. Last year, the tribe quit a longstanding revenue-sharing agreement with the state --- nearly $330 million in 2018 --- after negotiations on a new gambling deal went nowhere.
Tax revenues nosedived after businesses shut down or dramatically scaled back in March and April and as unemployment soared.
The economic sector that has taken the biggest hit is hospitality. Parrish said Thursday the industry will see improvement as people become comfortable going out, which will at some point require a readily available coronavirus vaccine.
The U.S. Department of Labor report released Thursday included one positive for Florida: The state’s first-time unemployment claims filed last week represented a nearly 50 percent drop from the 207,707 first-time claims reported the prior week.
Since March 15, more than 2.4 million jobless applications have been filed in Florida, of which 1.93 million are considered “unique,” according to the state Department of Economic Opportunity.
Florida last week moved into the second phase of DeSantis’ economic reopening plan, with bars, movie theaters and tattoo shops allowed to get back to business. A first phase allowed restaurants and retailers to operate with limited occupancy.
Parrish said a big sign of the state returning to normal will be when students are back on campus.
“When kids go back to school and college football starts back up again, you know, we’re really back on the right track,” Parrish said. “Certainly, a lot of college towns like Tallahassee and Gainesville, their economy depends on this. So, we hope that'll happen. And I believe just opening up in a safe manner is the best thing they can do.”