October Update: COVID-19 Impacts on Florida’s Budget

Yesterday, the Florida Office of Economics and Demographics Research released the October Revenue Report providing details regarding receipts and distributions to the State’s general revenue fund during the month of October.  This report generally reflects September retail sales tax activity.

Florida’s general revenue fund is the main source of discretionary funding for the State.  In January 2020, the State’s economists estimated that the State would receive $36.2B in general revenue during the State’s fiscal year that ended June 30, 2020. Of that amount, approximately $2B in the anticipated revenues were projected to be surplus funds which would have rolled over to the current state fiscal year as reserves. Unfortunately, the pandemic’s historic impact on the economy slashed anticipated state revenues.  And ultimately, the State finished the last fiscal year nearly $1.9 billion below those estimates, which represented a 5.7% loss from the expectations prior to COVID-19.

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.  The majority of this loss estimated would be due to projected overall sales tax declines of $2.8B.  Many of these sales tax losses were anticipated in the tourism & recreation sector which includes not only out-of-state tourists, but also sales to Florida residents at restaurants, local attractions and other leisure-based activities which have been negatively affected by the pandemic.

Thankfully, since the official August forecast, state revenue collections have greatly exceeded expectations.

  • August – $177.3M above estimate
  • September – $230.2M above estimate
  • October – $313.5M above estimate

3-Month Total – $719.6M above estimate

Most notably, the October general revenue collections exceeded the pre-pandemic January 2020 forecast by $35.4M.  This is the first time the January 2020 forecast has been exceeded since March 2020.  Ultimately, the overall collections in October 2020 essentially matched the collections for October 2019, which is a promising sign the economy is moving in a good direction.

Analyzed a different way, general revenue collections for the current state fiscal year 2020-2021 are, after the first four months, only $193.5M below the pre-pandemic January 2020 forecast.  Hopefully, this trajectory of revenue collections continue to show growth in the economy.

Specific Taxes

Nearly 92% of the total gain for October came from Sales Tax.  Of the seventeen general revenue sources, nine saw growth both exceeding the actual collections in October 2019 and the August 2020 forecast for October 2020:

  • Sales Tax – $287.4M above estimate (3.4% above October 2019)
  • Documentary Stamp Tax to general revenue – $27M above estimate (32.1% above October 2019)
  • Corporate Filing Fees – $8.4M above estimate (1% above October 2019)
  • Beverage Taxes – $6M above estimate (39.6% above October 2019)
  • Intangibles Taxes – $5.9M above estimate (4.5% above October 2019)
  • Insurance Taxes – $3.3M above estimate (19.8% above October 2019)
  • Counties’ Medicaid Share – $0.6M above estimate (1.2% above October 2019)
  • Tobacco Tax – $0.3M above estimate (1.9% above October 2019)
  • Other Nonoperating Revenues – $4.8M above estimate (29.6% above October 2019)

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