MIAMI (CBSMiami) – Many times when a cash registers rings in Florida the state collects sales tax. That money funds more than 70 percent of the state’s general revenues. It’s money that goes to things like education and healthcare. Over the past two months, since Florida’s economy largely shut down, estimates are that the sales tax in Florida plummeted by more than $700 million.
“That is a catastrophic hit to our state’s revenues,” said Jimmy Patronis, Florida’s Chief Financial Officer and a member of Gov. Ron DeSantis’ Cabinet and Re-Open Florida Task Force.
“The state of Florida has a tremendous loss of revenue and it will be a recovery that will have some adjustments at all levels of state government and local government,” Patronis said.
Patronis does not think the COVID-19 pandemic will result in state layoffs, major cuts to state services or tax increases for residents. However, he does think the state may have to freeze hiring and look at other tough measures.
“All of those measures, those type of austerity measures, will go into place,” Patronis said.
The concerns are real for those who rely on sales tax revenue for funding, like Broward Schools Superintendent Robert Runcie, who recently told CBS 4 News of his fear over a sales tax shortfall.
“We could anticipate budget cuts in the 20-25 percent range for the coming school year,” Runcie said.
Democratic State Representative Michael Gottlieb said the shuttered businesses are reason for concern. But he said the bright side is that Florida is sitting on billions of dollars in reserves.
“While I’m concerned, I do think that we have a healthy state,” Gottlieb said. “We have a healthy economy and I think we have the opportunity to protect ourselves although we do have to be mindful that we’re coming into hurricane season and some of that reserve money might be needed. Hopefully not.”
Still unknown is when residents will feel comfortable and have the disposable income to shop in malls, eat at restaurants and return to their pre-pandemic spending patterns. It may take significant time for shoppers — and sales tax revenue — to recover. The CARES Act, signed by President Trump in late March, funneled money to the states, including nearly $6 billion to Florida. But there are tight restrictions on how most of that money can be spent for COVID-19 purposes. Patronis and Gottlieb believe the feds might loosen those restrictions.
“There will be flexibility and I wouldn’t be surprised if there’s some developing flexibility as the next month progresses,” Patronis said.
“We’re hoping that the federal government will relax those restrictions and allow the states to use the money as they see fit to best help the people who live in their states,” Gottlieb said.
Gottlieb would like to see a special session of the Florida Legislature in the coming weeks to deal with the budget shortfall. However, no date has been set and at least one prominent Republican has been quoted saying it might be too early to assess the economic damage from COVID-19.