With Florida’s recovery better-than-expected, economists add $2 billion to forecast

TALLAHASSEE – Florida economists Tuesday added a stunning $2 billion-plus to the state’s revenue forecast, saying that consumer spending and corporate earnings have far topped expectations in recent months.

Powered mainly by a spike in sales tax collections, the state’s treasury should be brimming with almost $1.5 billion more than anticipated this year, and another $550.8 million next year, economists concluded.

“Much of the gain in the current year reflects a faster-than-expected recovery,” said Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, and one of the four economists who agreed on Tuesday’s forecast.

The windfall of more available cash comes as the Florida House and Senate prepare to approve separate state budget plans for the year beginning July 1. Much of the closing weeks of the legislative session – set to end April 30 – will center on settling differences between the two proposals.

The new revenue estimate will help that along. A truism in Tallahassee is that more money always helps.

Still, the Senate’s budget is $95 billion – but does not use any of the $10 billion in federal stimulus money flowing to state government. The House’s blueprint is $97.1 billion, and scatters $8 billion of the federal aid approved by President Joe Biden and the Democratic-controlled Congress across programs while tucking more than $2 billion into reserves.

Senate President Wilton Simpson, R-Trilby, has said he favors using at least some of the federal dollars on infrastructure projects, designed to bolster the economy and make overdue repairs to state buildings, roads, bridges and other projects.

Republican leaders have said they are wary of using the one-time federal money on state programs that demand dollars year-after-year. But Tuesday’s announced influx of state tax collections should provide another pot of money where lawmakers can turn to plug budget holes.

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The COVID-19 pandemic year has been a roller coaster for state finances. When the state shut down for a month last April, Gov. Ron DeSantis responded soon after by vetoing $1 billion from the state budget and ordered agencies to hold back on some spending to retain cash.

The first round of federal aid, the CARES Act, helped bolster state finances. Even so, by August, the state’s revenue estimating conference was predicting a $2.7 billion budget shortfall for this year, threatening spending for schools, social programs and health care.

Even in December, when the conference upgraded its financial outlook – also citing enhanced consumer spending and corporate earnings – lawmakers were still faced with revenue that might come up about $2 billion shy of what’s needed to keep programs going.

The state’s latest forecast comes after two additional rounds of federal aid – the latest being the $1.9 trillion package approved soon after Biden took office in January. Much of the fears about red ink have now been erased in Tallahassee, although it puts traditionally tight-spending Republican leaders in a spot where they may still want to further fatten reserves, rather than finance needed programs.

State reserves included in the budget plans in the House and Senate are already at $5 billion.

John Kennedy is a reporter in the USA TODAY Network’s Florida Capital Bureau. He can be reached at jkennedy2@gannett.com, or on Twitter at @JKennedyReport