Florida's revenue is expected to drop $5.4 billion over two years compared to original projections as the tourism industry lags and unemployment remains high because of the coronavirus pandemic, the Legislature's top economist told lawmakers Thursday.
That includes a $3.4 billion shortfall for the fiscal year that began July 1 and $2 billion for the following fiscal year. Amy Baker told the Joint Legislative Budget Commission the 2021-2022 fiscal year projections are based on an effective vaccine being available by the middle of next year.
“We believe until there’s a vaccine manufactured and widely deployed and in place, a number of people, regardless of what government says, are going to continue to have very limited interactions,” Baker said. “They’re not going to go to stores as much as normal, they’re not going to go out to dinner.”
Florida has no income tax and relies heavily on its sales tax. The money tourists spend substantially drives up revenue. But Baker said it will take up to three years for tourism to recover.
“Unfortunately, the tourism industry — everything from lodging to airplanes to cruises, the whole tourism industry — is going to be the slowest improving sector that we have and it will take the longest,” she said.
But she said the current economic downturn won't be as bad as the Great Recession.
“The Great Recession impact on state revenues was over a longer period of time and it took a while to build into the negative. This one, obviously related to the pandemic, was very sharp, very sudden, very deep, but it will not continue to have the effect on the economy overall that you saw in the Great Recession,” Baker said. “It’s going to take a while to recover from this one, but it will be a little bit faster.”
Lawmakers will go open their annual session in March, when they'll have to decide how to deal shortfalls this year and next year. That could include cuts, finding new sources of revenue or dipping into the Florida's $3.9 billion in reserves.
“The situation that we've been dealing with the state and the budget is really unprecedented in modern times in the state of Florida. We're in a once in a generation pandemic and the set of circumstances and the challenges that we're facing are unusual and we haven't seen them before,” said Republican Sen. Rob Bradley, who chairs the Appropriations Committee.