On Feb. 1, 2023, Gov. Ron DeSantis unveiled his spending and tax proposals for fiscal year (FY) 2023-24. The governor is proposing a $114.7 billion budget, which represents an increase of $4.7 billion, or 4 percent, over the current-year budget. Additionally, the governor’s tax proposal includes new short-term sales tax holidays, year-long holidays, and permanent tax expenditures that would cost $1.4 billion, a $322 million (or 22.4 percent) increase over the current-year tax package. However, with state tax collections slowing down and a potential recession looming, plans to cut taxes, offer new tax expenditures, and enact short-term sales tax holidays without strategies to raise revenue will only make it harder to balance future budgets.
It is easy to lose sight of efficient, effective, and equitable tax and spending policies when state reserves are at historic highs and revenue forecasts continue to surpass estimates. Yet, while economic growth has proven more resilient than some gloomier COVID-19 forecasts predicted, it has slowed down over the past few years. Moreover, it is important to consider that the unique conditions that helped Florida recover and accumulate reserves are unlikely to repeat.
With the wind down of federal COVID-19 aid and fiscal stimulus boosts for households, businesses, and state (and local) governments, which helped boost reserves, public services, and kept millions from falling into poverty, individuals may not have the same amount to spend. Since Florida is disproportionately dependent on general sales taxes to balance the state budget, changes in consumption directly impact spending plans. Relatedly, as individuals struggle to keep up with inflation, particularly Black, Latina/o, and middle-income households, personal savings have decreased while debt has increased. Consequently, this could force consumers to cut spending as they look to pay down their debt and replenish savings. Moreover, a full-fledged recession in 2023, the probability of which economists have pegged at 61 percent, is not outside the realm of possibility.
Policymakers in Florida, unlike federal legislators, are legally required to balance the state budget each fiscal year, even when revenue is down.
Recessions are particularly harmful to state governments. Policymakers in Florida, unlike federal legislators, are legally required to balance the state budget each fiscal year, even when revenue is down. Unless they offset revenue shortfalls with targeted tax hikes or by using other fiscal management tools like rainy day funds, policymakers must make sizable cuts in essential services that could prompt teacher layoffs and growth in class sizes, less access to affordable health care or child care, deferred maintenance on roads and other vital infrastructure, and cutbacks to libraries, senior centers, and other local services.
Against the backdrop of a slowdown in state revenue collections and inflation and recession concerns, FPI highlights five key facts about the governor's recommended budget.
1. Gov. DeSantis recommends expanding Florida’s Family Empowerment Scholarship (FES) voucher program. However, unlike the Florida House’s and Senate’s proposals, the governor’s maintains certain eligibility limits.
House Bill 1 (2023), the House Speaker’s priority school choice bill, was unveiled on January 19, 2023. This bill and companion bill (Senate Bill 202), if approved, would eliminate all income eligibility caps for vouchers and would expand eligibility to students being homeschooled. At an average “scholarship” amount of over $8,000 per student, the cost of expansion is estimated at $4 billion dollars in the 2023-24 school year. Notably, the governor’s budget does not include a dollar amount for the expansion of vouchers or its impact on the state’s funding for public schools; he does, however, offer his own proposal to expand vouchers that — unlike the Legislature’s versions — includes income eligibility caps.
2. While the governor has proposed increasing funding for the Department of Children and Families (DCF), it is unclear how these funds would be used to effectively redetermine eligibility for 5 million Medicaid recipients.
Since 2020, Floridians enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) have been able to keep their coverage without having to re-enroll, a rule referred to as “continuous coverage.” As the nation faces the end of continuous coverage, it is crucial that state agencies have adequate funding to ensure Floridians who remain eligible do not lose their Medicaid benefits. The proposed budget includes a $298 million (or 7 percent) increase over the FY 2022-23 budget for DCF; this includes $20 million for the modernization of the Automated Community Connection to Economic Self Sufficiency (ACCESS) system. Updating the ACCESS system can facilitate automatic Medicaid renewals and make it easier for individuals who receive services like Medicaid or Temporary Assistance for Needy Families (TANF) to submit and update paperwork. The proposed budget also includes $5.3 million to support the operation of the Economic Self Sufficiency Customer Call Center.
3. The governor’s recommended budget includes funding cuts to Florida Forever. The program received the highest appropriation in over a decade in the FY 2022-23 (current year) budget.
Gov. DeSantis’ proposal includes $100 million for Florida Forever, a vital conservation program approved by voters to conserve and protect unique and ecologically important land throughout the state. This represents a 10 percent cut to current-year funding of $110.7 million, which was the highest appropriation to the program in 14 years. A $100-million allocation is the minimum that advocates have called for in recent years, as funding has been uneven and far below the $300 million in annual funds originally intended for the program. Since the governor released his proposal, the Senate has introduced SB 524, “Land Acquisition Trust Fund,” to increase Florida Forever’s funding up to $350 million annually and extend its current bonds through 2054. (Bonds are what the state uses to purchase, or refinance on, land for the Florida Forever program.) Similar legislative proposals did not pass during the 2022 legislative session.
4. The recommended budget, like the current-year budget, includes funding for transporting “unauthorized” people to various locations in the United States.
The governor’s proposal includes $12 million for “transporting inspected, unauthorized” people within the United States in an effort to keep them from settling in Florida. The funds are for transporting immigrants, other undefined costs, and the costs of litigation that could result from this appropriation. Immigrants would not have to be in Florida for the state to divert them to other locations. Notably, the Legislature appropriated $12 million to this initiative last session, which is $4 million more than what the governor had initially recommended. Governor DeSantis and Florida’s Secretary of Transportation were subsequently sued for this initiative by immigration and legal advocates last fall, after the state very publicly transported migrants across the country.
Many of Florida’s 4.3 million immigrants are taxpayers, business owners, frontline workers, and students making important contributions to the state, and not all have a documented immigration status.
Shortly after the governor announced his proposal, lawmakers introduced bills (SB 6-B/HB 5B) to take up the issue in a special session. The legislation passed in both chambers, and the governor signed the bill into law. There are notable differences between this legislation and the governor’s proposal, including that SB 6-B/HB 5B appropriates fewer dollars ($10 million), narrows the definition of who would be impacted, and makes it a permanent program. Regardless of the legality of this program, it is important to note that Florida is reliant on immigrants -– regardless of their legal status. Many of Florida’s 4.3 million immigrants are taxpayers, business owners, frontline workers, and students making important contributions to the state, and not all have a documented immigration status.
5. The governor’s budget includes increases in teacher pay and the base student allocation, and the proposal would increase access to child care.
The governor’s recommended budget includes $200 million more in funding over the FY 2022-23 level to increase the salaries of teachers and other instructional personnel, bringing the total to $1 billion. Unlike last year, the additional funds in the governor’s proposal could be used to augment the salaries of all teachers, not just new teachers. It is crucial that the state fully invest in recruitment and retention of qualified teachers, as Florida ranked 48th nationwide in average teacher pay in 2021. The governor’s budget also proposes to increase the base student allocation (BSA) from $4,587 to $4,709, an increase of $122 per student. The governor also proposes funding toward access to School Readiness services by offering $30 million in non-recurring block grant dollars to expand services to families living at or below 200 percent of the federal poverty level or 85 percent of the state median income. The caveat again is that local early learning coalitions must provide a local match to access these funds.