As the COVID-19 pandemic recedes, Florida’s economy is recovering quickly while its job picture has improved, but several threats to its economic health have appeared on the horizon.
On Monday, the state Legislature approved a record $112.1 billion budget for fiscal 2022-2023 that includes tax cuts for residents, pay raises for state employees and a gas tax holiday for drivers.
Florida’s economy continued to show stability as data released Monday showed the state’s unemployment rate was unchanged at 3.5% in January and continued to stay under the national average.
The state Senate and General Assembly passed the spending bills on Monday. The plan is up 10.4% from the $101.5 billion fiscal 2021-2022 budget and about $12 billion higher than the $99.7 billion fiscal 2022-2023 budget that Gov. Ron DeSantis proposed in December.
The bill now heads to the governor for his signature. DeSantis will have 15 days to review and approve the spending plan or veto individual line item appropriations before the budget is finalized.
DeSantis is a Republican and the GOP dominates both houses of the Legislature.
Democrats, while generally supportive of many measures in the bill, have criticized the budget, saying it ignored the need for more services and didn’t do enough to expand affordable housing.
The budget total does not include spending the remaining $3.5 billion allocated to the state under the American Recovery Plan Act, the state Division of Bond Finance said Tuesday. The Legislature approved the spending for the federal funds, but it is only effective upon receipt of the ARPA funds, which is expected in May.
The budget does include $43.7 billion of general fund spending, up 20% from the current budget to be funded with general revenue collections and $40 million in trust fund transfers. Additionally, $8.9 billion in total was set aside in state reserves and a $1 billion state inflation fund was created.
The budget is expected to give residents about $658 million in tax savings through a variety of sales tax holidays.
The legislation creates a month-long gas tax holiday that cuts the tax on motor fuels by 25 cents a gallon. It also contains sales tax holidays for a back-to-school supplies, disaster preparedness goods, admissions to music, sporting and cultural events and for skilled worker tools.
“We are increasing the length of sales tax holidays for hurricane season and back-to-school, and also creating new short-term and long-term sales tax relief on key items needed by families,” state Senate President Wilton Simpson said in a release.
The bill also eliminates property taxes for homeowners who suffered losses in the deadly Champlain Towers condominium collapse in Surfside last year and expands existing property tax relief for deployed military service members, widows, widowers and blind or disabled Floridians.
The budget contains $100 million for Everglades restoration along with funds dedicated to clean water resources and maintaining the funding created last year for mitigating sea level rise.
“Building upon the ‘Always Ready’ legislation from last session, we continue to prioritize efforts to prepare our communities and our state against the effects of flooding and sea-level rise,” said Rep. Demi Busatta Cabrera, R-Coral Gables.
Not much new bond issuance is expected in the new fiscal year or beyond.
In the next 10 years, roughly $1.8 billion of net tax-supported debt is projected to be issued, the state Division of Bond Finance said in a December report. Over the past decade, there has been a significant decrease in projected debt issuance, which reflects less reliance on debt to finance infrastructure.
As of June 30, the state’s total debt outstanding was $18.4 billion, down $825 million from the previous fiscal year.
Florida’s general obligation bonds are rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.
According to the Tax Foundation, Florida, ranked at number four, is one of only a few states that has a perfect score on the individual income tax component of its 2022 State Business Tax Climate Index.
Florida, along with Alaska, South Dakota and Wyoming, has no individual income tax and no payroll taxes other than the unemployment insurance tax.
Florida’s elected leaders are eager to move past the pandemic, after more than 5.8 million cases of COVID-19, with more than 72,000 reported deaths.
Florida’s unemployment rate has fallen to 3.5% from 6.0% in January 2021, data released Monday showed. U.S. Labor Department data also shows Florida’s unemployment rate has remained below the national rate for 14 straight months.
In January, Florida’s labor force participation total was 10,448,000, higher than February 2020’s pre-pandemic labor force and up by 318,000 year-over-year.
“Florida has surpassed 2019 numbers in almost every regard, including employment and labor force participation while lockdown states continue to lag,” DeSantis said.
And it’s not only the state that is seeing an economic recovery.
Miami surpassed New York City in March as the most expensive housing market in the country, according to a survey by RealtyHop.
Home prices in the city surged during the COVID-19 pandemic, as buyers from the Northeast flooded into South Florida.
Miami home prices started to rise sharply in 2021 and RealtyHop said that trend has continued into this year.
“The city has now moved up to be the least affordable housing market in the nation. Households would need to contribute 78.71% of their income towards homeownership costs, which is up 1.55% from last month,” the report said.
Tourism is also picking up as localities get ready for Spring break and beyond as they look to the future.
Broward County is located in southeast Florida with a population of about 2 million people; the largest city in the county is Fort Lauderdale. On Monday, Moody’s assigned an Aa1 rating to the county’s upcoming sale of $369 million of Series 2022 first tier revenue bonds for its convention center hotel and assigned a stable outlook.
Proceeds will be used for the construction of a new hotel next to the county’s convention center, which is currently undergoing renovation. After the sale, the county will have about $1.08 billion in non-ad valorem debt outstanding.
While the coronavirus’ deadly path seems to have run its course, pending future variants, other worrying developments from nature and by man could await the country and the Sunshine State.
A new virulent strain of bird flu is spreading across the United States, the Centers for Disease Control and Prevention says.
The risk to the general public’s health from current H5N1 bird flu viruses is low, the CDC said this month, though it added that some people with job-related or recreational exposures to birds may be at higher risk of infection
Millions of farm birds have been killed in an attempt to stop the spread, Reuters reports.
If the outbreak gets worse, this could push the cost of groceries even higher at a time when inflation is already high.
Also, Florida’s orange crop — a large source of tax revenues in the state — may turn out be the lowest in 75 years, according to the U.S. Department of Agriculture.
The forecast from USDA’s agricultural statistics board was for 44.5 million boxes of oranges, a decline of 16% from last year. The Washington Post reported the drop was spurred by an incurable disease spread by insects called citrus greening, which shrivels up the fruit and makes it taste bitter.