Florida Economists Add More Than $2 Billion in Estimated General Revenue Over Two Years

Yesterday, December 21, the Florida Revenue Estimating Conference finalized an updated General Revenue Forecast. This latest forecast added $1.4 billion in anticipated general revenue to the forecast for the current state fiscal year (July 1, 2020 – June 30, 2021) and another $626 million to the forecast for the next state fiscal year (July 1, 2021 – June 30, 2022).

The Status of the Current State Budget

Pre-pandemic, economists projected the State would receive $36.5B in general revenue during the current July 1, 2020 – June 30, 2021 state fiscal year. In mid-August, those economists reduced the general revenue forecast by $3.4B due to continued anticipated losses resulting from the pandemic. Thankfully, since that August forecast, the actual state revenue collections have greatly exceeded expectations:

August – $177.3 M above estimate

September – $230.2 M above estimate

October – $313.5 M above estimate

November – $288.0 M above estimate

4-Month Total – $1.009 B above estimate

As actual collections have significantly exceeded the August forecast, state economists adopted a new forecast today that reflected calculated, yet conservative, increases to the State’s projected general revenue funds. In this latest official estimate, the economists project the State will receive approximately $800 million in additional sales tax general revenue in the current state fiscal year. While this sales tax increase is both warranted and welcomed, the new forecast still suggests that sales tax collections in 2020-2021 will be more than $2 billion less than pre-pandemic forecasts.

The new forecast also added approximately $250 million in additional corporate income tax revenues, which is the second largest source of general revenue behind the sales tax. This corporate income tax forecast became a point of contention between the four principals of the Revenue Estimating Conference and caused the previously scheduled Friday meeting to be continued until today. Ultimately, the principals compromised on a corporate income tax forecast that reflected the increased taxes actually collected through mid-December, but at least one principal still had significant concerns that corporate income tax revenues would significantly decline during calendar year 2021.

The economists also adopted a new Financial Outlook Statement, which reflects the $5.8 billion in federal CARES Act funds received by the State during fiscal year 2019-2020. Those federal funds and unspent revenues during the last state fiscal year are estimated to provide the state approximately $39.2 billion in general revenue available to be used in the current state fiscal year. The Outlook Statement also shows $37.3 billion is the effective amount of general revenue projected to be spent in the current year (with approximately $2.4 billion being spent on COVID-19 related expenditures). Therefore, the economists estimate the State will have a general revenue surplus of $1.95 billion that will be available as one-time funds when the 2021 Legislature develops the next Florida budget.

The 2021 – 2022 State Budget

As discussed above, today’s general revenue forecast also resulted in an additional $626 million in revenue being added to the State’s 2021 – 2022 budget. The new forecast proposes the State will receive approximately $34.3 billion in general revenue next year, which is a year-to-year increase of $1.8 billion. While this amount is still substantially below pre-pandemic estimates, the increase would allow the 2021 Legislature to appropriate up to $36 billion in general revenue. However, this amount of spending seems both unlikely and unnecessary at a time when the State is recovering from a global pandemic. It is much more likely the Florida Legislature will continue to conservatively budget and appropriate funds in the coming years, as those same conservative principles allowed Florida to make it through the pandemic so far in a better financial situation than other states.

We hope this information has been helpful. If you have any questions, you may contact French at fbrown@www.deanmead.com or via phone at 850-459-0992.