Florida’s tax revenue tops expectations again, but inflation becoming a factor

by | Jun 2, 2022

 

TALLAHASSEE — Florida tax collections continue to top expectations, but the impacts of inflation could be showing in how people spend money.

General-revenue collections in April topped projections by 23 percent, or $824.1 million, according to a report posted online Wednesday by the Legislature’s Office of Economic & Demographic Research.

Economists had projected the state would collect nearly $3.588 billion in general revenue during the month. The state brought in about $4.412 billion.

Monthly revenues have repeatedly topped projections. During the first four months of 2022, collections exceeded expectations by $2.125 billion.

But the report said sales-tax collections in April accounted for “less than one-half of the total overage” for the first time since September.

“The immediate response to inflation is an increase in sales tax collections that reflects the higher prices,” the report said. “Persistent inflation conditions, however, ultimately suppress collections as consumers begin to spend more money on non-taxable necessities like food and health care.”

The report said prices for food at home increased by 10.8 percent in April, the largest 12-month percentage increase since November 1980. Also, the average price of a gallon of regular unleaded gasoline in Florida hit a record high of $4.65 on Wednesday, according to data from the AAA auto club.

Meanwhile, Floridians’ personal-savings rate continues to fall.

The rate, which is the percentage of disposable income that people save, went from 6.3 percent in February to 5.0 percent in March and 4.4 percent in April, according to state economists.

In the 2018-2019 fiscal year, before the COVID-19 pandemic, the rate was 7.9 percent.

Aided by federal stimulus money, the savings rate ballooned to 33.7 percent during the early stages of the pandemic.

During an appearance last week in the Gadsden County town of Havana, Gov. Ron DeSantis said the state is well-positioned for the initial impacts of a potential recession because of record reserves.

“If we end up in a situation where the revenue slows, the economy slows, I’m not going to miss a beat,” DeSantis said. “We’re going to fund the schools. We’re going to fund infrastructure. We’re going to fund all the key things. I’ll take some money from the rainy-day fund, just plug it in. And we go.”

DeSantis said revenue for May is likely to be $600 million over estimates.

In the April report from state economists, sales taxes on tourism came in 19.4 percent over projections, while tax revenues from auto sales were 26.5 percent over projections.

Also, in what the report said was a sign that the “housing market remained stronger than expected,” documentary-stamp taxes on real-estate transactions were 159.7 percent over projections. Economists expected the state to collect $97.4 million in “doc stamp” revenue, but the total was $252.9 million.

General revenue is closely watched in state government, as legislators use it to fund key portions of education and health-care programs and prisons.

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