TAMPA BAY — Florida is a state disproportionately affected by sales tax revenues to fund its state and local budgets, but local officials say it’s too early to tell how bad the economic fallout from shutting down all but essential businesses is to contend with the coronavirus.
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“We won’t know until May what’s gone on in March,” says Plant City Chief Financial Officer Diane Reichard.
Indian Rocks Beach City Manager Gregg Mims agrees, saying that it will be probably be at least another month to truly see the impact of the virus on his city’s revenue stream. But he does say that “everybody is being conservative with their spending” in his Pinellas County community.
Grim picture expected
Whatever those revenues turn out to be from March, they’re likely to be much worse when the April figures are released. That’s because while the economy started feeling the pinch of the novel coronavirus in the first part of the month.
March 11 was the day that Tom Hanks reported that he had been infected by the coronavirus and the NBA announced they were indefinitely suspending their season. Local economies in the Tampa Bay area didn’t shut down until two weeks later.
In addition, Pinellas County’s local “safer-at-home” order, which effectively closed scores of businesses, didn’t take effect until March 26. Hillsborough County’s local state of emergency didn’t officially begin until March 27.
Florida’s Office of Economic and Demographic Research does have March sales collection revenue numbers. They say that that sales tax collections for the month of March came in $12.4 million below the estimate adopted by the state’s Revenue Estimating Conference.
While that may sound large, it’s actually less than one percent under what was predicted.
“The overall positive result is likely influenced by pre-buying activity that occurred as people began to take steps to prepare for potential illness and social distancing,” the report says.
States facing fiscal cliff?
Senate President Bill Galvano has said that federal funding from the $2.2 trillion federal CARES act will bring sufficient revenue to the state to avoid any major fiscal disaster.
“We expect the federal government will offer clarification that these funds can also be used to offset revenue losses in the upcoming 2020-21 Fiscal Year, meaning these federal funds would add to Florida’s already robust reserve to fund appropriations made by the Legislature in the General Appropriations Act,” Galvano wrote to legislators on April 24.
However, the U.S. Treasury said last week that those funds can’t be used to address state revenue shortfalls.
“These restrictions on the CRF (Coronavirus Relief Fund) Fund puts states in a bind, and without additional federal relief states are going to face a fiscal cliff,” said Sadaf Knight with the nonpartisan think tank Florida Policy Institute on a conference call on Tuesday.
Knight added that the potential negative impact to Florida is significant due to the shutdowns to deal with the coronavirus.
"Our tax system already puts us in a precarious position for any economic disruption,” she said. “We rely so heavily on the sales and use taxes – 80 percent almost of the general revenue come from these taxes, compared to 32 percent on average among all states. And our state budget is driven by consumer spending, particularly generated by tourism.”