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Yesterday, the Florida Office of Economics and Demographics Research released the June Revenue Report providing details regarding receipts and distributions to the State’s general revenue fund during the month of June, which reflects May sales tax activity.
Florida’s general revenue fund is the main source of discretionary funding for the State. This January, the State’s economists estimated that the State would receive $36.2B in general revenue during the State’s fiscal year July 1, 2019 – June 30, 2020. The State’s fiscal year just finished with an estimated loss for the General Revenue Fund of nearly $1.9 billion, down 5.7% from the expectations held in January when the last forecast was made.
Of this loss, 84.7 percent came from sales tax, which was down 6.1% from the anticipated level. Through March 2020, overall collections posted a gain of $202.4 million to the estimate. Over April, May and June, COVID-19 response and the Governor’s Safer at Home order resulted in a loss of nearly $2.1 billion across all revenue sources. April provided the greatest loss of $878.1M (42.1 percent of the total loss for the quarter), followed consecutively by a May loss of $779.5M (37.4 percent) and June loss of $427.8M (20.5 percent). Thankfully, the revenue shortfalls have been trending downward as the State continues to reopen.
Sales and Use Tax
- From April through June 2020, the State previously estimated it would collect approximately $6.8B in sales tax revenue to be deposited into the general revenue fund. Historically, eighty to ninety percent of the revenues in the general revenue fund come from sales and use tax.
- In April, sales tax general revenue collections were $598.2M under the estimated $2.48B in revenues (-24%).
- A significant portion of the sales tax shortfall was driven by tourism associated activities ($283.9M under estimate or -42%).
- Automobile sales for the month were $103.8M (-22.5%) under estimate.
- These collections reflect March sales tax activity. The Governor’s Safer at Home order was in place for approximately half of March.
- In May, state sales and use tax total adjusted collections were $695.4M under the estimated $2.19B in revenues (-32%).
- Tourism associated activities were $379.3M (-65.6%) below estimates and automobile sales were $127.6M (-30%) below estimates.
- Local Government Half-Cent collections were $66.4M (-36%) under estimate.
- These collections reflect April sales tax activity. The Governor’s Safer at Home order was in place for the whole month of April.
- In June, sales tax general collections were $328M under the estimated $2.15B in revenues (-15.3%).
- Tourism associated activities were $275.9M (-52.6%) below estimates and automobile sales were $13.3M (-3.1%) below estimates.
- These collections reflect May sales tax activity.
- The combined April through June sales tax general revenue impact was -$1.62 billion.
Corporate Income Tax
- From March through June 2020, the State previously estimated it would collect approximately $1.3B in corporate income tax revenue to be deposited into the general revenue fund.
- On April 27th, the Florida Department of Revenue deferred the May 1st corporate income tax payment deadline to June 1st for calendar year filers. The Department also delayed the corporate income tax return filing deadlines until August 3rd. See Emergency Order #20-52-DOR-003. This deferral likely resulted in a reduction of $246M (-53%) in April corporate income tax receipts, and it’s possible that those payments will be shifted to the June Revenue Report.
- In May, corporate income tax collections were $55.1M (-25.7%) below estimates.
- In June, corporate income tax collections were $86.2M (-17.2%) below estimates. While the corporate income tax revenues lost in April and May were not realized in June, preliminary July data suggests corporate income tax receipts are coming in significantly higher than the monthly estimates.
- The combined March through June corporate income tax revenues are $382.5M below estimates.
Even though COVID-19 has nearly eliminated the previously projected $2.1B general revenue surplus at the end of the State fiscal year ending June 30th, we still believe Florida’s resilient fiscal policies have put it in a good position to weather this economic storm. The State appears to be collecting enough revenues to avoid having to dip into the approximately $2.2B in separate reserve funds. The State also has $4.6B currently available under the CARES Act to use to potentially offset some of the state and local revenue losses directly due to COVID-19. Future additional federal funding provided under the recently released HEALS Act or another act of Congress would also likely provide additional relief to states, local governments, and schools.
We hope this information has been helpful. If you have any questions, please feel free to give me a call at 850-459-0992.