State revenue projections get bump

by | Jan 17, 2024

Florida’s state economists have raised general revenue projections by $2.18 billion for this and next fiscal year, with over $700 million already allocated for hurricane relief and other programs, while forecasting moderate annual growth

State economists on Tuesday increased general revenue projections by about $2.18 billion for the current fiscal year and next year, giving a boost to lawmakers as they put together a new budget.

But more than $700 million of that increased revenue has already been allocated for things such as hurricane assistance and home-hardening programs.

Also, a long-range forecast projects mostly moderate annual revenue growth — 1.6 percent to 2.9 percent — after the current fiscal year ends June 30.

That could mean hard decisions as lawmakers push priorities with big price tags.

General revenue, which is made up of such things as sales taxes, plays a critical role in funding programs such as education, health care, and prisons. A panel of economists, known as the Revenue Estimating Conference, meets periodically during the year to revise general revenue estimates.

The projections released Tuesday replaced estimates issued in August and will be used by lawmakers in the coming weeks as they negotiate a budget for the 2024-2025 fiscal year, which will start July 1.

Most of the increase in projected revenues, about $1.591 billion, is expected during the current year.

Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said that while the forecast environment has “greatly” stabilized since August, a potential for disruptions continues from geopolitical events, national fiscal-policy decisions and future Federal Reserve actions.

“Things are much more stable. We have a lot of confidence in what we’ve seen that was reflecting a good level of (economic) activity for a variety of reasons. It’s going to last a little bit more,” Baker said. “But long term, once you get out of this year, there really wasn’t a big change to either our national or our Florida economic forecasts. So, it didn’t warrant persisting that level of change or that kind of a change into future years.”

The forecast boosts revenue projections by about $585.5 million, or 1.6 percent, for the 2024-2025 fiscal year and by $505.9 million, or 2.3 percent, for the 2025-2026 fiscal year. The outlook goes up by $586.5 million, or 2.9 percent, for the 2026-2027 fiscal year and by $458 million, or 2.7 percent, for the 2028-2029 fiscal year.

In the August forecast, economists removed the prospects of a “mild” recession that was in the forecast earlier.

General revenue collections through December were up $1.26 billion, or 6 percent, over the August forecast, said Stephanie Massengale, who oversees monthly revenue and financial outlook statements for the Office of Economic & Demographic Research.

The primary driver has been sales-tax collections, which were 4.1 percent over projections. They were followed by increases in corporate income taxes, earnings on investments — because of favorable interest rates — and insurance premium taxes, Massengale said.

Inflation has helped increase sales-tax collections because of higher prices on goods. But it has also resulted in consumers using more credit, which has drawn recurring concerns from economists in monthly reports.


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