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Pandemic changes game when it comes to Florida budget cuts

Significant loss of state revenue could mean more line-item vetoes from governor

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TALLAHASSEE, Fla. – Gov. Ron DeSantis still hasn’t received Florida’s new budget, which takes effect in July.

In it are significant raises for teachers and others, but those raises may no longer be something the state can afford.

Florida lawmakers set aside $500 million for teacher raises, another $400 million for state employees, and $54 million for an additional boost for correctional officers.

But with the pandemic, all bets are off.

In late March, the governor, without being asked, put the teacher raises in play.

“You look at the teacher compensation, obviously, we put a lot into that. And we’ll see what happens with the budget, but that’s important,” DeSantis said.

April’s revenue expectations were down more than $800 million. May’s numbers are likely to be just as bad.

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.

Enter Florida TaxWatch.

The fiscal-watchdog group is recommending at least $136 million in vetoes of projects that did not get proper review.

There is also $500 million in member projects that could be in their sights.

“We’re asking the governor to take a close look at all member projects,” said Kurt Wenner with Florida TaxWatch.

To make up for pandemic losses, TaxWatch is also recommending the state sign a new gaming deal with the Seminole Tribe.

TaxWatch President Dominic Calabro estimates collecting sales taxes from online sales could be worth more than $1 billion.

“I suspect by the second or third year, we’re looking at $2 billion,” said Calabro.

A new gaming deal and collecting taxes already owed on remote sales could together raise almost $3 billion a year after the changes are fully implemented.

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.

Asked specifically about whether it would recommend vetoing the raises, Calabro said it’s a possibility.

“We’ll be looking at those, among many others,” Calabro said. “Everything is and should be on the table.”

The state does have over $4 billion in reserves and that much and more from federal pandemic relief, but that might not be enough to cover the economic damage expected for months to come.

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.

The News Service of Florida contributed to this report.