As the Florida Senate President Ben Albritton noted in his explanation of the Senate’s budget proposal (SB 2500), “the best thing we can do to keep Florida affordable is to keep taxes low … [and] to keep taxes low, state government has to live within its means, pay down debt, and save for the future.” The Senate’s proposed $115 billion budget for FY 2026–2027 reflects these views and would cut current spending by $1.9 billion. In comparison, the Florida House of Representatives’ $113.6 billion proposal (HB 5001) would cut current spending by nearly $3.4 billion. Both proposals stand in contrast to Gov. DeSantis’ $117.4 billion budget recommendation, and, if adopted, would signal a turn toward austerity, a response to fiscal constraints that focuses on reducing spending, i.e., funding cuts, instead of raising revenue to maintain public services. The shift to austerity from historic budget highs supported by COVID-era federal funding is not surprising considering that the Senate Committee on Appropriations, the House Appropriations Committee, and the Legislative Office of Economic and Demographic Research (EDR) have all been warning lawmakers of potential state deficits since 2024. Their latest Long-Range Financial Outlook (LRFO) for FYs 2026–27 through 2028–29 affirms that if lawmakers carry on with the same budget and tax policy priorities, expenditures will outpace revenues — leading to a $1.5 billion deficit in FY 2027–28 and a $6.6 billion deficit in FY 2028–29.
Within the context of looming deficits, leaders in the Florida House and Senate clearly believe they are dealing with a spending problem with a simple solution: fewer expenditures. However, there are at least three issues that complicate this approach that policymakers ought to consider as they negotiate and finalize the budget: H.R. 1, the state’s tax preferences, and persistent funding gaps.
H.R. 1 Exacerbates Current Deficit Projections, Policymakers Should Capitalize on Opportunities to Decouple From It
Recently, the Senate Committee on Finance and Tax heard a presentation on H.R. 1’s impact on Florida’s corporate income tax (CIT) code, which maintains a relationship with the federal Internal Revenue Code (IRC) by “piggybacking” on the IRC as it exists on January 1 of each year. Specifically, to calculate the CIT due, Florida uses federal taxable income as a starting point and then modifies it by applying state-based additions, subtractions, and other adjustments. In Florida, piggybacking gives lawmakers the option to choose which federal provisions to adopt or decouple from (i.e., throw out specific tax provisions in the IRC). According to the presentation, piggybacking on all of the CIT provisions in H.R. 1 will cost nearly $3.5 billion in foregone revenue in FY 2026–27, with a subsequent additional loss of $384 million annually. At the same time, H.R. 1 guts SNAP and Medicaid benefits, forcing Florida policymakers to make up the difference or deny benefits or eligibility to millions of Floridians, further eroding the quality of already underfunded public services. Since the latest LRFO does not include the fiscal impact of H.R. 1, current deficit projections underestimate the true nature of the challenges ahead.
Even if Lawmakers Cut Expenditures, Failure to Raise Revenue Will Continue to Limit the Provision of Public Services
Although policymakers face significant budget challenges, they continue to focus on cutting expenditures or spending while doing nothing to raise revenue. Instead, the Legislature has championed the opposite: collecting less revenue. The drive to eliminate taxes is not new; during the 2025 Legislative Session, despite deficit projections, policymakers forfeited over $1 billion annually by repealing the state’s sales tax on commercial leases and making sales tax holidays permanent. To date, during the 2026 legislative session, tax conversations in Tallahassee have concentrated on eliminating property taxes, with the House of Representatives advancing what “may well be the most aggressive legislation ever passed by a legislative chamber on property taxes in the history of the United States,” according to Speaker Daniel Perez. The House’s proposal would cost local governments $18.3 billion for the elimination of non-school property taxes for homesteaded properties; this is in addition to the House’s proposal to repeal local business taxes (HB 103), which would cost local governments $200 million annually.
Via taxes, Florida has already set a trend for collecting and spending less revenue than most other states. According to the Tax Foundation, on a per capita basis, Florida collects less revenue than 46 other states. In short, Florida does not tap into the same revenue streams available to other states, and its inability to do so limits the quality and quantity of public services. The single-minded decision to collect less revenue despite budget troubles ought to be a signal to state agencies and Floridians that the quality and provision of public services will decrease at a time when over 4 million households struggle to afford the basics.
There Are Persistent Funding Problems That Have Not Been/Cannot Be Solved by Austerity
Funding cuts and revenue reductions are not sustainable given the existence of outstanding budgetary needs and expenses that continue to erode public coffers. For example, the combination of austerity and lackluster revenue collections would make it so that three-quarters of Florida prisons remain without A/C. Additionally, the majority of the state’s correctional facilities would continue to operate under dire conditions, plagued by persistent infrastructure and staffing issues. Concerning these issues, the House, unlike the Senate, is proposing a $250 million annual commitment for correctional facilities alongside the construction of a new one (HB 5403). Nevertheless, this proposal falls short of the recommendations from a 2023 state-sponsored study that identified $2.2 billion worth of immediate repair needs.
Austerity also implies that as policymakers implement federal changes to SNAP and Medicaid under H.R. 1, they will deliberately look toward solutions that limit eligibility and benefits. This has already been shown in the proposals outlined in SB 1758/HB 1453, which would make health coverage more difficult to attain and keep, and would unnecessarily increase food insecurity (SB 1758 and HB 693). This is also evident in the FY 2026–27 budget proposals, which only marginally reduce the number of people waiting for Home- and Community-Based Services (HCBS) preventative programs, meaning that thousands of homebound adults and disabled individuals will remain in massive waitlists, languishing without care. While it is noteworthy that the House and Senate are proposing $156 million and $126.7 million, respectively, for the state’s newest Medicaid managed care offering for persons with disabilities, this is still not enough to address demand and future austerity measures still cast doubt over long-term funding.
Even if the state proceeds with austerity (i.e., cutting spending), there are expenses that will continue to siphon public dollars. For example, Florida’s universal voucher program will continue to expand. In the budget proposals, both the House and Senate allocate $4.5 billion — an increase from the current FY 2025-26 appropriation of $3.8 billion.
Conclusion
Within the context of looming deficits — which do not capture the full effect of H.R. 1 — lawmakers are poised to both cut spending and forfeit revenue. These decisions would simply exacerbate current budget issues and set Florida down a long road of austerity, having deep impacts across the state as communities would lose access to programs, services, and public goods. Nonetheless, this outcome is not inevitable. Instead of austerity, policymakers ought to consider ways to raise revenue that would address the current budget crises, avoid a deficit, and ensure that Floridians have access to good quality public services.
The final budget agreement (the General Appropriations Act) must be reached by March 10 to end the legislative session by March 13, due to a constitutionally mandated 72-hour "cooling-off” period. If the process stalls and the chambers do not come to an agreement, they will have to extend the session.
