By John Haughey | Watchdog.org
A week after learning Florida’s projected $223 million surplus in this year’s budget “has likely disappeared” as Hurricane Michael’s recovery costs mount, state fiscal analysts are offering some unexpectedly rosy forecasts for the fiscal year 2020 budget that could include tax refunds for state businesses.
According to the Legislature’s Office of Economic and Demographic Research (OEDR), the state is seeing an unanticipated surge in revenue collections that will boost coffers next year and the year after.
Since the 2019 fiscal year began July 1, state revenue collections have exceeded August projections by $365.2 million, primarily from significant increases in sales and corporate tax income.
Sales tax revenues are $173.5 million above what analysts projected and $126 million more in corporate income tax collections than forecast, OEDR Coordinator Amy Baker told the Senate Appropriations Committee in a pre-session primer in Tallahassee this week.
In August, OEDR analysts projected a $156 million increase in corporate income-tax collections in 2018. The additional $126 million boost could put that hike at nearly $300 million.
The unexpected surge could also mean returning more than $60 million in tax refunds to state businesses, following adoption of House Bill 7093, introduced by Rep. Paul Renner, R-Palm Coast, during the 2018 legislative session.
If the anticipated surge does “materialize” as projected, Baker said, it “would trigger the tax rate reduction and refunds” outlined in HB 7093.
The bill includes a “trigger mechanism” to automatically cut the state’s corporate income tax rate if collections for this fiscal year exceed state projections by more than 7 percent. If that happens, the rate would be cut in 2019 and refunded to taxpayers in 2020.
The rate-cut “trigger” also applies to the franchise tax for banks and savings associations.
Baker said if estimates are accurate, state businesses could see $50 million in tax savings in 2020 and $12.6 million in 2021.
Florida’s 6 percent sales tax is the state government’s largest single source of revenue, generating about $26 billion a year. The state’s 5.5 percent corporate income tax funnels about $2.2 billion a year into the state’s coffers.
Revenues from the two taxes are the primary sources of money the Legislature uses to pay for schools, health programs and prisons.
Extrapolated beyond Fiscal 2020 into the year after, the OEDR estimates initial revenue forecasts will increase by $842 million over two years — by $461.5 million next year and by $380.5 million in Fiscal 2021.
Baker said the $842 million boost in anticipated state revenues would be the largest biennial increase since April 2006.
However, she cautioned, national indicators show some weakening in key economic factors that could influence how the state’s forecasts pan out.
“There is an elevated level of risk due to the mature stage of the current economic expansion,” she said.
Collectively, including all estimated revenues, the OEDR estimates the state should collect an additional $1.48 billion in general revenue this year, a 4.8 percent increase over the same forecast this time last year, and $1.01 billion, or 3.1 percent, more than the forecasts for 2019.
The 21-member Senate Appropriations Committee, chaired by Rep. Rob Bradley, R-Orange Park, will meet several more times before the 2019 legislative session begins on March 5, although a scheduled Jan. 10 pre-session primer has been scratched.