Despite rising COVID-19 cases and skyrocketing unemployment numbers, state leaders have ignored solutions that would help stabilize Florida’s budget and make up for a significant revenue shortfall. We have been saying for years that Florida’s upside-down tax system and our state’s heavy reliance on sales tax puts us at risk during times of economic downturn. This has come to fruition, as new data show that the state’s general revenue has taken a severe hit in May. Florida Policy Institute’s own analysis predicted severe losses in revenue will continue as long as unemployment remains at unprecedented levels and the pandemic continues to harm the health and economic security of Florida families.
Florida received $8.3 billion from the federal CARES Act’s Coronavirus Relief Fund, with $2.5 billion going directly to local governments. However, guidance issued by the U.S. Department of Treasury states that those funds may not be used to make up for revenue shortfalls. States need revised guidance in order to buoy state budgets and boost families and communities facing hardship. The governor should be more vocal and press the Trump Administration and Congress to allow for more flexibility for these funds.
Further, Governor DeSantis must lobby Congress for more federal COVID-19 aid and a Federal Medical Assistance Percentage increase and extension, and all state leaders must work together to preserve crucial public services, like mental health care and education. Lawmakers need to identify and implement revenue-raising solutions, like enforcing the sales tax on online sales, eliminating tax exemptions for luxury items, holding corporations accountable for their tax liability, and eliminating revenue-losing business subsidy programs.
The COVID-19 pandemic and economic recession are far from over. Today’s dreary revenue report was entirely predictable, and confirms that the state is headed rapidly toward a fiscal cliff unless Florida’s leaders take proactive measures.
Earlier this month we spearheaded a joint letter, along with 35 organizations, offering the solutions listed above. Looking to outsized vetoes instead of exhausting every other possible option first is reckless and will only hurt families and communities who are already struggling during this health and economic crisis.