27 APR 2020

Coronavirus Florida: DeSantis, State face grim financial picture

April 27, 2020

Herald Tribune – Gannett Capital Bureau, by John Kennedy


Gov. Ron DeSantis is scrambling Florida government to respond to the coronavirus, but a huge loss of tax revenue looks likely to upend a host of state programs.


TALLAHASSEE – With Florida’s tourist-powered economy in a tailspin, Gov. Ron DeSantis has been forced to the frontlines of the fight against the coronavirus, desperately seeking to stop a looming massive loss of jobs and tax collections that fuel state programs.

Time is a factor – and he’s already hearing from industries staggered by the widespread shutdowns.

“He gets it. The goal is, if we can stop the bleeding a little bit while the federal government readies a stimulus package, most will make it,” said Carol Dover, longtime president and CEO of the Florida Restaurant and Lodging Association.  “I was here for 9/11 and for the housing crisis. But for our industry, this is far, far worse,” she said.

DeSantis on Friday toughened an earlier order that closed bars and cut restaurant seating in half by now limiting restaurants solely to take-out orders, while also closing gyms and fitness centers across the state. The coronavirus restrictions further hammer the hospitality and tourism industries, which serve as the cornerstone of the state’s economy.

Attempting to soften the impact, DeSantis so far has enacted a $50 million Small Business Emergency Bridge Loan program, which allows companies with anywhere from two to 100 employees to apply for short-term loans of as much as $50,000.

DeSantis also will waive the requirement that people out of work contact at least five possible employers during a week to receive unemployment benefits capped at $275 weekly, among the lowest levels in the nation.

The state’s unemployment compensation benefits were made tougher to get under former Gov. Rick Scott and the Republican-led Legislature, a move which cost the jobless but saved employers millions of dollars.

The state’s record-low, 2.8% unemployment rate in January, the latest reporting month, also will limit the number of weeks people can collect benefits, since payments are pegged to the state’s official jobless rate.

DeSantis has stopped short, though, of promising any increase in benefits for those now suddenly thrown out of work. Instead, the focus seems to be on keeping employers afloat.

“You hate to see someone go out of business because of some external event that had nothing to do with any decisions that they made,” DeSantis said.

He added that keeping Florida businesses from going under is critical to narrowing the scope of the coronavirus’ hit on the state’s economy. Keeping them “solvent” he said, will decide “whether we can bounce back quicker, or whether this is a more prolonged economic struggle.”

But many Florida lawmakers, who adjourned the 2020 legislative session Thursday after passing a $93.2 billion state budget, say more drastic action is needed. Fast.

Most expect to be called back to Tallahassee in coming weeks to rewrite that budget for the fiscal year beginning July 1. It’s certain to be battered by a loss of tax collections which threaten all matters of state spending, including financing for schools, health care, social programs, aid to local governments and highway construction.

The budget includes $3.9 billion in reserves, which may help sustain spending for a while.

But more money would help; a longshot idea already proposed is legislation requiring out-of-state online businesses to collect and remit sales taxes on transactions they make with Floridians, estimated as pulling $425 million into the state treasury.

For lawmakers, there’s also a new urgency to renew a gambling compact with the Seminole Tribe, which could equal hundreds of millions in new dollars.

Lawmakers have talked of launching a grant program for businesses – something better than a loan. Amid the budget-rebalancing certain to come, there also will be a need to steer more money into public health, telehealth programs, and mental health services, whose shortfalls are being exposed by the coronavirus, some lawmakers said.

Just last September, state economists released a three-year financial outlook for Florida which concluded, “tourism-related revenue losses pose the greatest potential risk to the economic outlook.”

Tourist spending, alone, contributes more than 13% — $3.2 billion — to Florida’s general revenue. And sales tax collections stemming from consumer spending equal 77% of the general revenue fund at the core of financing Florida government.

“Well, that’s gone. That’s out the window,” Sen. Tom Lee, R-Thonotosassa, said of the three-year forecast lawmakers were working from.

Following the Sept. 11 attacks in 2001, tourism effectively halted in Florida and lawmakers convened in session twice that fall to cut $1.1 billion from the state budget. Included were cuts to a host of social programs and deferral of a tax cut for investors. Reserves mostly went untouched.

The 2008 housing crash also forced an immediate $1.1 billion budget cut. But the impact of the crash spanned years and forced budget reductions well into the next decade.

“When you don’t have spending, and you don’t have tourism, the losses are going to mount for all levels of government,” said Sean Snaith, a University of Central Florida economist.

“The difficulty right now is, we have no idea where the bottom of all this is,” he added.