Florida’s sales tax collections for March are lagging well behind what state officials expected to see before the pandemic, according to a preliminary report from the Florida Department of Revenue.
A May 1 daily revenue report, first disclosed by the Orlando Sentinel, showed that sales and use taxes, plus a few other unrelated revenues, collected during April were about $773 million below the state’s $3.1 billion sales tax estimate.
Companies pay sales taxes the month after the sales take place. So April’s collections provide a glimpse of the fiscal impact of lost sales during March, when Florida employers began to shutter their businesses and lay off workers in an attempt to slow the virus that causes COVID-19.
Sales tax collections could be still worse for April, when even more of Florida’s $1.1 trillion economy was grinding to a halt.
“April’s clearly a concern,” said state Rep. W. Travis Cummings, R-Fleming Island, who chairs the appropriations committee in the Florida House of Representatives. State officials don’t expect to have a full picture of April’s collections until about May 25.
Sales taxes, which depend heavily on tourism that peaks in the spring, typically produce $26.2 billion in revenue a year and are the state’s leading source of revenue. They pay for more than 78 percent of Tallahassee’s general revenue programs.
A Department of Revenue spokeswoman cautioned Tuesday that the daily report is not an official summary, and should not be used for comparisons with the state’s original estimate. For one thing, the estimate does not include some tax collections — such as taxes on electricity, as well as additional local option sales taxes and tourist development taxes in some counties — that do get included in the daily report’s sales tax collections totals.
Moreover, the daily report “reflects deposits as of a particular day,” department spokeswoman Bethany Wester said in an email. The totals are adjusted daily to account for things such as the ongoing deposits of checks, duplicate payments, bounced checks and electronic funds transfers.
“We are still reviewing the top 500 taxpayers to determine how many have filed a return,” she said. “We are also still processing checks that were postmarked by the due date, so the total will change but we can’t predict by how much. That information will not become clear for several days.”
If the preliminary number holds, however, it could reflect a drop-off that was faster and deeper than what Florida saw during the Great Recession. The state’s sales and use tax revenues fell by a little more than 20 percent from 2006 to 2009 and didn’t get back to their pre-recession levels until 2014.
Now pandemic-related shutdowns are doing the most damage to sectors of the economy that pay large percentages of sales taxes. (State summaries of sales taxes often include use taxes, such as taxes owed on online sales by sellers located outside Florida.)
For example, retailing, whether of general merchandise, food, clothing or home and building supplies, last year accounted for about $7.5 billion in sales and use taxes, or more than a quarter of the total.
Nearly 20 percent — or about $5.6 billion — came from restaurants, hotels, amusement parks and events.
In Largo, Mike Dodaro said his business dropped by about half after he suspended dine-in service and closed the bars at his two pizza restaurants, one of which also did a lot of catered orders for large companies in the Gateway area with staffs now working from home.
“We’re probably off 50 percent,” he said in mid-April. “We have inside seating, outside seating (and) a sports bar atmosphere in both locations. We lose all that — we don’t get any of that — now that it’s just pickup and delivery.”
Auto dealers paid $4 billion, or 14 percent of the total. Commercial landlords, many who now have waived rents, given discounts or are not receiving money from tenants, paid $2 billion in sales taxes.
In response to the pandemic’s disruptions to business, the Department of Revenue issued an emergency order in late March giving companies more time to pay sales taxes.
Typically, sales and use taxes are due the first day of the month and are considered late after the 20th.
The emergency order allowed taxpayers who have been hurt by the pandemic to pay their sales taxes from March as late as April 30. Wester said reconciling collections typically takes two weeks after the due date, so a complete picture may not be official until mid-May.
For a similar reason, corporate income tax collections were down by more than half, or $248 million for the month, as of May 1.
That, Wester said, reflects the effect of a similar executive order giving corporations another month to make corporate income tax payments, which are due on different dates, depending when the taxpayer’s fiscal year ends.
For now, “we do have adequate reserves" of $4 billion, and “we feel good about our cash flow,” Cummings said. It helped that January and February had better-than-expected sales tax collections, he said, and he hoped that the phased re-opening of businesses that began this week could improve revenues in May.
The big question, Cummings said, is whether Florida will be able to use pandemic relief funds that Congress allocated to states to cover medical and public health expenses directly related to the pandemic to also help make up for lost state revenues. So far, the Trump administration’s answer has been no.
“There’s a lot of advocacy from states and local governments throughout the country, not just Florida, that are hoping the federal government takes a closer look at that and provides more flexibility for those dollars,” Cummings said. “If they do, then I think that helps us greatly.”
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