TALLAHASSEE — When they passed a $93.2 billion state budget in March, Florida lawmakers knew a growing global pandemic was going to blow a hole through the state’s finances.
Two months into the crisis, the extent of the economic damage caused by the COVID-19 related shutdowns is still unclear. This year’s budget, which runs through June, appears secure. But already lawmakers are bracing for a dramatic reduction to next year’s state budget, which begins July 1, and are debating whether they need to reconvene in Tallahassee for an emergency session.
“We’re going to be short billions and billions of dollars,” said Sen. Tom Lee, R-Thonotosassa. “We’re not going to recover to current general revenue levels for a long time.”
The coronavirus-related shortfalls could cost Gov. Ron DeSantis top priorities — including some that were praised by both Democrats and Republicans.
The Republican governor championed $500 million in teacher pay raises and $100 million in new environmental spending. And for the first time in nearly two decades, lawmakers decided not to spend $370 million intended for affordable housing on other projects.
Now, all of that could be on the chopping block.
“As someone who experienced the 2008 budget cuts, I can tell you, it is going to be painful,” said the House Democrats’ incoming co-minority leader, Rep. Evan Jenne, D-Dania Beach. “When you’re talking about billions in shortfalls, everything’s on the table.”
A spokeswoman for DeSantis did not respond to a series of questions about the governor’s budget priorities.
One thing that could have helped close the budget hole: Choosing not to refund the state’s largest companies a total of $543 million in corporate taxes. Despite calls from Democrats to keep the money, DeSantis signed off on the giveaway last month.
Early estimates show the state, at a minimum, will be short billions and could face years of smaller budgets. The state’s two main economic drivers — tourism and agriculture — have been crushed since Floridians started staying home. The state has already disclosed that March’s sales and use taxes were about $773 million less than expected. Revenue for April, when Floridians were ordered by DeSantis to stay home, will be worse. Medicaid enrollment is also surging. Even with federal help, Florida could be on the hook for more than $1 billion, according to the Agency for Health Care Administration.
DeSantis and lawmakers are hoping billions in federal dollars and $3 billion in reserves could balance next year’s budget. Unlike the federal budget and Congress, the state’s Constitution requires lawmakers to balance the budget each year.
Incoming Senate President Wilton Simpson, R-Trilby, said DeSantis could veto $700 million to $800 million from the budget, but lawmakers have yet to send it to him to sign. But he said federal help could keep DeSantis and lawmakers from taking drastic cost-cutting measures.
And yet, members of DeSantis’ own Republican party say they don’t want any federal help. On Tuesday, 11 of Florida’s most hard-line conservative lawmakers signed a letter saying federal help would be “harmful to taxpayers, federalism, and ultimately the states themselves.”
If the budget isn’t balanced, lawmakers could be forced to meet in an emergency legislative session to address the shortfall.
• • •
If the Legislature reconvenes before November, it would mean a special session during the throes of an election year in the nation’s highest-profile swing state.
Some GOP lawmakers are hoping to avoid that, fearing the political fallout from a broken unemployment system that has left hundreds of thousands of Floridians unable to collect benefits.
“No one in leadership is clamoring to bring us back to Tallahassee for the purpose of bringing a special session so that Democrats can rail on the unemployment system for a week,” Lee said.
Democrats have already requested a special session, but Republicans voted it down.
“I believe that the drumbeat to have a special session is going to continue to grow louder,” said Sen. Gary Farmer, D-Fort Lauderdale, who will be leading his party in the Florida Senate next year. “I think it’s a kind of a game of chicken right now.”
Plugging budget holes would force legislators to make potentially unpopular decisions at the least politically opportune time. For example, the $500 million in teacher raises could pit the state’s financial reality against one of the top legislative priorities from the last session.
Rep. Chris Latvala, chairman of the House PreK-12 appropriations subcommittee, said he doesn’t see the raises getting cut.
“People poured a lot of time and effort into teachers getting raises, none more so than the governor,” Latvala said.
But Lee, who sits on the Senate appropriations committee, said the teacher raises — and the 3 percent across the board raise for state employees — could get axed.
During the most recent economic downturn, the Great Recession that began in 2008, Florida lawmakers cushioned some budget cuts by raising fees on things like driver’s license renewals, vehicle tags and first-time car registrations.
“I can’t imagine a scenario where the Legislature raises revenue at this time,” Lee said. “Not going into a presidential election.”
• • •
In Florida, education alone makes up about 52 percent of all general revenue spending, according to an analysis from Florida TaxWatch, a group that advocates for less government spending.
That makes schools a hard-to-miss target for lawmakers forced to cut. During the last recession, lawmakers slashed current-year budgets, forcing schools to give millions back after the money had been committed. Schools eliminated thousands of positions but avoided major layoffs when federal stimulus money came through.
That support proved temporary. Districts had to revamp their budgets again after then-Gov. Rick Scott cut education spending by $1 billion in 2011, contending the state could not sustain the funding level. He later proposed adding the money back, as the state could afford it.
The specter of a repeat has many school boards nervous. Some, such as Palm Beach County, already have frozen hiring and new spending in anticipation of the worst.
But this downturn, by its very nature, will be different. This time around, education could need more, not less, money as the state gets back to normal. Officials have made clear that schools play a critical role in the re-opening process because parents need safe places for their children if they are to return to work.
Andrew Spar, vice president of the Florida Education Association, said lawmakers have made assurances that Florida is well situated to weather the economic storm and to protect public education funding.
He noted that Education Commissioner Richard Corcoran has stressed the need to bridge any learning gaps that occurred during distance learning. That cannot happen with cuts, Spar said.
If nothing else, he suggested, the state and districts can dip into their “rainy day” funds.
“Those reserves are meant for a crisis situation,” Spar said. “We’re in a crisis situation.”
Times/Herald staff writer Mary Ellen Klas and the News Service of Florida contributed to this report.