Lawmakers get revenue boost ahead of budget talks
TALLAHASSEE, Fla. – A surge in hurricane-recovery building and a change in the way the state collects gambling payments from the Seminole Tribe will give lawmakers a little fiscal wiggle room as they negotiate a new $87 billion state budget.
State analysts on Friday adjusted estimates for revenue collections upward by about $462 million, including $181 million this year and $280.5 million for the fiscal year that will start July 1.
The bulk of the increase is one-time, non-recurring money, which will limit its use in the state budget. But it can be a positive factor as Senate and House members work out differences in their budget bills, which were passed Thursday.
“It was money they weren’t expecting,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “It’s going to be nonrecurring, which comes with all the issues associated with that. It’s good news.”
But she also said “it doesn’t really alter the shape” of the longer-term financial challenges facing the state.
A major factor in the increase is explained by the economic cycle Florida goes through when it is hit by a major hurricane like Irma, a powerful storm that impacted the majority of the state in September.
In the immediate aftermath of such a storm, state spending increases and sales-tax collections drop. But then recovery begins and residents, aided by insurance payments, rebuild and repair their property. That increases sales taxes, the state’s single-largest revenue source.
“Hurricane Irma suppressed collections during the initial emergency in September while boosting collections in the recovery months as rebuilding began in earnest,” according to the new estimate.
The adjusted forecast shows an increase in sales tax collections this year of $189 million, with about two-thirds of that related to recovery activities. The sales tax estimate increased by $171 million in 2018-19, with 69 percent attributed to recovery.
The recovery activity is projected to end next year, and an analysis done by Baker and other state economists in 2017 showed the long-term financial effects of a major hurricane or a hurricane season are likely to be negative for the state budget.
The report showed after the 2005 hurricane season, the state spent $626 million, while reaping only $422 million in increased revenue.
Baker said she anticipates a similar result from Irma where “the state ends up spending more money than it brings in, by a good bit.”
Another positive in the new forecast is an adjustment in the way the Seminole Tribe of Florida makes payments from its casino operations.
Starting next year, the tribe will make monthly payments based on its annual estimate of gambling activity. That replaces a system where the tribe paid a fixed monthly amount and then made a one-time adjustment in the subsequent year.
The net effect will be an increase of more than $100 million in state revenue from the casinos next year, most of which will be a one-time increase.
The new forecast noted a major negative factor in that corporate income tax collections were $113 million below the estimate this year through December. It was likely caused by the state decision to let businesses impacted by Irma hold off on tax payments until Feb. 15.
The report predicts the shortfall will be negated once the delayed collections begin coming in next month.
After passing their proposed 2018-2019 budgets on Thursday, the House and Senate will begin negotiating their differences in the next few weeks. The legislative session is scheduled to end March 9, with a new budget taking effect July 1.
News Service of Florida