Continued strong sales tax collections have led Florida state economists to raise their forecast of how much revenue the state will receive in the next two fiscal years by $5.3 billion, despite fears that inflated inflation and rising interest rates will significantly affect the economy next year.
Revenue collected for June was $4.53 billion, or $978.7 million (27%) above estimate, pushing overall revenue for the fiscal year that ended June 30 to $44 billion, or $3.85 billion above economists’ forecasts. Sales taxes accounted for most of this increase, amounting to $2.6 billion more than estimated.
This strong performance led the Revenue Estimation Committee and the Bureau of Economic and Demographic Research increase their revenue forecast for fiscal years 2022-23 and 2023-24 by $5.3 billion on Tuesday. The increase, however, still reflects a decrease in projected revenue for the current fiscal year of nearly $1 billion.
Pandemic shocks are still reverberating through the national and state economy, and while the federal stimulus has helped cushion the effects of the COVID-19-induced slowdown, runaway inflation at levels not seen in 40 years has raises fears of another economic downturn.
On Tuesday, economists struggled to know when this downturn will hit, how deep it will go and how quickly the state will rebound. Some warning signs, such as canceled real estate transactions as sales approach, increased use of consumer credit and a decline in savings, worry economists despite the more optimistic forecasts.
“The economic disruption is still evident, with challenges such as the end of the significant federal monetary and fiscal stimulus provided in the early years of the pandemic, the rapid reduction in savings over the past year, the high credit usage in recent months, continued normalization of spending on services and away from taxable goods, and strong inflationary pressures on households,” reads the report from state economists.
The increases in projections apparently mean that lawmakers will have more money to use when crafting the 2023-24 budget in the upcoming March regular session. But the EDR will revise its revenue forecast by then, and if the predicted economic downturn occurs before March, lawmakers may be looking at a leaner revenue picture.