August 16, 2022

10 Things to Know: FY 2022-23 Budget and Tax Package

Each year, Florida Policy Institute (FPI) releases an in-depth summary of the enacted state budget and tax package, including an overview of the current policy landscape and appropriations in each major issue area.

Below, FPI recaps 10 points of interest outlined in its budget analysis for fiscal year (FY) 2022-23.

1. State leaders used $200 million in federal funding to pay for the one month gas-tax holiday. However, they might have to forfeit those dollars.

The tax cut package includes the “Florida Motor Fuel Relief Act of 2022,” a one-month motor fuel tax exemption period. This holiday, which will cost $200 million, is funded in the budget with American Rescue Plan Act (ARPA) dollars. However, the U.S. Department of the Treasury prohibits states from using ARPA dollars to “directly or indirectly offset a reduction in net tax revenue.” Therefore, it is unclear if Florida will have to forfeit $200 million in ARPA funds or pay for the holiday through its own general revenue.

Further, as FPI points out, sales tax holidays do nothing to fix the state’s regressive tax code. In Florida, as a percentage of total income, a person pays less tax as their income increases - as a result, the state has one of the most “upside down” tax codes in the nation. Targeted tax relief, such as through a Working Floridians Tax Rebate, would help make the tax code more equitable.

2. An influx of federal relief dollars helped Florida policymakers avoid making deep budget cuts.

The increased funding in Florida’s operating budget is driven by billions in federal pandemic-related relief dollars and not by increased general revenue collections or investments. Federal grants increased from $27 billion in FY 2018-2019 to $35 billion in FY 2019-20, a 30 percent increase. Then, federal grants increased from $35 billion to $53 billion in FY 2020-21, a 53 percent increase. During these fiscal years, which cover the peak of the pandemic, some key areas received federal funding, including the Agency for Health Care Administration (the bulk of U.S. grants went to the Medical Care Trust Fund), the Department of Economic Opportunity (including critical federal investment in the Unemployment Compensation Benefit Trust Fund), the Department of Education, and the Department of Health.

3. State lawmakers could draw down additional federal dollars for behavioral health.

While the budget includes general revenue increases for community mental health (nearly $126.3 million to the Department of Children and Families) and the Mental Health Assistance Allotment ($20 million increase to the Department of Education), it fails to leverage these and other state dollars to draw down millions in additional federal funding available for crisis services. Specifically, under ARPA, if the state opted in, it could bring in over $100 million per year for the first three years to fund mobile response teams.  

4. There is no additional funding to take people off the waitlist for the Statewide Medicaid Managed Long Term Care Program.

This program has a waitlist of over 54,000. It provides the most robust package of long-term care services. Notably, for every dollar the state spends on SMMC-LTC, it receives $1.56 in federal reimbursement. Plus, the state is currently receiving an even higher federal match for the duration of the federal COVID-19 public health emergency. 

5. The enacted budget does not include an increase in TANF payment levels. 

Florida lawmakers have kept Temporary Assistance for Needy Families (TANF) payments at the same level for roughly three decades. As a result, inflation has eroded the payment value by about 41 percent. The maximum TANF benefit for families in Florida — $303/month for a family of three — is under 17 percent of the poverty level, which is not enough for families to make ends meet. 

TANF helps families with very low income make ends meet by providing them cash assistance to pay for subsistence needs like toothpaste, diapers, rent, and utilities. 

6. The budget allocates $193 million, a sizable $14 million cut, to maintenance and repair of Department of Corrections facilities.

The difference in funding levels between the previous year and FY 2022-23 is important because a reduction in funding means delaying critical improvements that DOC has been waiting on to help with an aging population — one with mounting health complications — and deteriorating building infrastructure. Illustratively, several of the state’s institutions were built more than five decades ago and are in dire need of renovations. (For instance, Cross City Correctional Institution was ordered shut in 2021 due to flooding.)

7. The budget reflects on state leaders’ promise to speed up the timeline of minimum wage increases, bringing state workers to $15 well before the rest of the state must comply with Amendment 2 (2020).

During the 2021 legislative session, state leaders raised the minimum wage for most full-time state workers to $13 per hour, anticipating Amendment 2’s phase-in (See callout box). Building on last year’s increases, the FY 2022-23 budget brings all “eligible” state employees and those in Other Personal Services to a $15 minimum wage on July 1.

The enacted budget also includes provisions that require contracted providers to bring certain employees to $15 per hour in 2022, including voluntary pre-K (VPK) personnel, public school district and SEED Miami employees, direct care staff working for Medicaid providers, juvenile detention and probation officers, local certified rape crisis center employees, and contracted Department of Veterans Affairs workers. 

Florida lawmakers’ commitment to boosting the minimum wage for these workers will help strengthen communities and jumpstart local economies. 

8. While the budget includes additional funding for voluntary pre-K (VPK) providers who pay all VPK employees at least $15 per hour, questions remain surrounding the time-limited nature of these dollars.

The total allocation for VPK in the enacted budget is $144 million (or 35 percent) more than it was in FY 2021-22. This includes $100 million in non-recurring dollars meant to offer VPK providers additional base student allocation funds if they apply to the Division of Early Learning and “submit an attestation confirming that within 30 days of receiving this additional funding, all VPK personnel employed by the provider or public school will receive wages of at least $15.00 per hour for VPK duties.” 

However, given that these funds are non-recurring, it remains to be seen: (1) how many VPK providers will apply to receive the additional funds in exchange for the wage increase; (2) whether the $100 million is enough to cover the minimum wage increase ahead of 2026; and (3) if policymakers will include more nonrecurring funds for the same purpose in future budgets if the $100 million is not enough.

9. The budget includes full funding for Medicaid and KidCare caseloads.

Per Florida’s Social Services Estimating Conference, Medicaid caseloads will remain at about 5 million in FY 2022-23. However, it is crucial to note that Florida has been receiving and will continue to receive increased federal Medicaid dollars during FY 2022-23 under the Families First Coronavirus Response Act for the duration of the federal public health emergency. The KidCare budget is $59 million less than the previous year budget due to declining caseloads.  

10. The budget includes funding to increase teacher pay, which is crucial given the massive teacher shortage.

Even with salary boosts over the last few years, Florida currently ranks 48th in the nation for its average teacher pay of $51,009, which is an increase of 3.8 percent since FY 2019- 20. Florida’s teacher pay actually decreased more than any other state from 2009 to 2018 when adjusted for inflation.

Increasing teacher pay is critical right now, as the state is in the middle of a teacher shortage. The Florida Education Association has stated that there were 9,500 vacancies statewide as of January 2022, including 4,359 vacancies in teacher positions. As FPI noted in a blog post last year, investments in teacher salaries are investments in children’s academic success, especially for students of color and students in under-resourced and high-poverty schools. Over the long run, increases in per pupil spending, which includes teacher pay, is associated with attaining more education, higher wages, and a decreased likelihood of living in poverty in adulthood.

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