TALLAHASSEE — Here’s the bad news about Florida’s pandemic-crushed economy: State lawmakers are facing a $5.4 billion revenue shortfall, tourism won’t recover for at least two years, and the unemployment rate won’t fall to close to 4 percent until 2027.
Here’s the good news: The impact isn’t expected to be as deep, or last as long, as the Great Recession.
That’s the sober forecast the Legislature’s chief economist, Amy Baker, gave state lawmakers on Thursday, six months into the state’s coronavirus pandemic.
In just two months, the pandemic shutdown caused the state’s unemployment rate to go from a 50-year low to a 50-year high, Baker said. Sales taxes fell dramatically as a result, and state government is facing a projected $3.4 billion revenue shortfall for the current fiscal year and a $2 billion shortfall for next year.
How Gov. Ron DeSantis and state lawmakers will fill those budget holes is undecided. The Republican-controlled House and Senate have refused to reconvene before November, when the election ushers in new leadership in the House and Senate — and a presidential race is decided.
So far, they’re pinning their hopes on using $5.8 billion in federal CARES Act money allocated by Congress to fill the budget. The money can only legally be spent on pandemic-related expenses, such as protective equipment and testing, but they expect Congress to change the law to allow them to use it fill gaps in the budget.
Just how much of the $5.8 billion would be available is also unclear, though. DeSantis has refused to say how he’s spending the money, and he says all of it has already been “obligated.”
State Sen. Oscar Braynon, D-Miami, questioned his Republican colleagues on Thursday why they still didn’t know how DeSantis has spent the money.
“I’m not even saying I disagree with how this money is being spent, because I don’t exactly know how or where we’re using it,” Braynon said.
Senate budget chairman Rob Bradley, R-Fleming Island, said afterward that lawmakers are expecting Congress to change the CARES Act to allow states to use the money to plug budget holes.
The state’s economic projection relies on a few big assumptions. It assumes a vaccine will be available to the public by next summer, and that the state won’t see a second recession — which some economists predict. The projection also doesn’t account for a severe natural disaster, such as a hurricane, that could wipe out the state’s reserves.
Even with those assumptions, Florida’s tourism sector is expected to recover slowly, starting next summer. Tourists who fly into the state, including those from overseas, won’t start visiting Florida until a year after a vaccine is released, Baker said. She said the estimate is based on studying previous disease outbreaks.
“Our belief is that tourism is going to take two to three years to recover, and it will be the longest-recovering sector that we have,” Baker said.
The unemployment rate, which reached 13.8 percent in April, has fallen steadily since. It’s expected to fall to 7.8 percent between April and June next year, and to fall to close to 4 percent by 2027. That’s faster than the Great Recession, which took about nine years to fall back to 4 percent.
But while the state’s unemployment rate will fall faster than it did during the Great Recession, the average Floridians' income never recovered from its pre-recession levels. Because the state is so reliant on low-wage service jobs, the state’s average income is just 87.4 percent of the national average, a figure that’s been on the decline for the last three years, according to Baker’s report.
The “only” thing that spared Floridians from worsening income levels this year, Baker said, was the additional $600 weekly unemployment benefits and the $1,200 stimulus checks Congress doled out at the beginning of the pandemic. The $600 benefits expired in July, however, leaving jobless Floridians to rely more on the state’s unemployment benefits, which, at up to $275 per week, is among the stingiest in the nation.
Bradley, who will leave office in November, said the state’s benefits should be increased, and incoming Senate Minority Leader Gary Farmer, D-Lighthouse Point, said Democrats would propose increasing the amounts in the next legislative session.
Despite the state’s future, Bradley said that Florida is still in a better financial position than many states, and that the state will still continue to draw people from New York, California and Illinois.
“The future’s bright for the Sunshine State,” he said.