TALLAHASSEE, Fla. — Florida's tourism-driven economy is suffering an unparalleled fiscal calamity amid the coronavirus crisis, with state economists reporting sales tax collections plummeted by $878 million in April.
While state leaders are optimistic a combination of reserves and federal funding will allow Tallahassee to weather the storm, some reformers say the news underscores a need for the legislature to create additional revenue streams.
Here's five questions asked and answered regarding the situation, how we got here, and where lawmakers stand on what to do next.
1. Why was the revenue decline so steep?
Florida's heavy reliance on sales taxes flowing from tourists makes it especially vulnerable to budget shortfalls during recessions, when fewer people take vacations. The coronavirus crisis has amplified that effect, bringing international travel to a halt and forcing the state's theme parks and beaches to close for weeks on end. The result has been a staggering state revenue nosedive.
2. Is the state budget in jeopardy of falling into the red?
It's uncertain if the crisis will upend the best laid plans of the legislature, which passed a $93 billion budget for the 2020-21 fiscal year in early March.
The state has a modest rainy day fund to help bridge any revenue-related shortfalls, and some of the $4.6 billion in federal CARES Act funding Tallahassee is receiving could potentially be available to plug budget holes, as well.
3. What about the longer term?
That's where reformers, including Florida TaxWatch CEO Dominic Calabro, come in. They say the crisis is driving home the imperative of diversifying Florida's revenue streams so that shocks caused by the ebb and flow of the tourism industry don't continue to threaten the state's fiscal position.
Specifically, Calabro says the legislature should consider better enforcing a law requiring online vendors to collect sales taxes from customers who are Florida residents. Some companies, including Amazon, charge Floridians sales tax; others do not.
"More and more purchases actually have been made online and will continue to be, so rather than just having shipping companies benefit, we can actually have all of our communities benefit by having remote sales and use tax," he says.
Calabro predicts stepped up enforcement could boost state revenues by $700 million per year.
4. What about gambling revenues?
Calabro is also calling on lawmakers to forge a new gaming exclusivity compact with the Seminole Tribe. The state's previous arrangement with the Seminoles, which allowed banked card games to be run at tribal casinos, expired last year.
A new compact could also yield in excess of $700 million in annual royalty payments to Tallahassee.
5. Where do lawmakers stand?
On both remote sales taxes and gaming, legislators have been at odds, with Republicans in the House often opposing Republicans in the Senate. The impact of the coronavirus crisis, however, could be changing the calculus.