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House budget chief Travis Cummings and Senate budget chief Rob Bradley brief reporters on the state's finances during a March 2020 budget conference.

Corona Economics

Tourism deficit will make up half of $2.7B shortfall for next fiscal year

The COVID-19 pandemic will carry a lasting effect through the next several years.

After such a hard fiscal hit in the opening months of the pandemic, Florida will be feeling the lingering effects of the COVID-19 recession for years to come, the Legislature’s budget expert told lawmakers Thursday.

The Legislature’s Office of Economic and Demographics Research (EDR) says shortfalls will last at least three future fiscal years, according to a report accepted by lawmakers during the Joint Legislative Budget Commission. The office’s coordinator, Amy Baker, says half of those deficits come from tourism alone, which is normally the state’s greatest boon.

During the next Legislative Session, which convenes in March, lawmakers will have $2.7 billion less than expected to play with for the 2021-22 fiscal year. The next two fiscal years will also come up short, with $1.9 billion and $926.8 million shortfalls anticipated for 2022-23 and 2023-24, respectively.

Tourism, which is normally the state’s greatest boon, fell 68.1% during the second quarter of 2020 compared to a year prior. While a vaccine could be around the corner, EDR says it can take more than a year for tourism to bounce back following an outbreak. With a pandemic as severe as COVID-19, the office warns a recovery could take two years.

“We’ve always talked about tourism and the sensitivity of our economy to tourism as being an important concern and a potential downside risk if anything were to happen,” Baker said. “With the outbreak of coronavirus, we actually did see probably the worst that we will ever see in terms of that downside risk materializing.”

Gov. Ron DeSantis has spent the last several weeks crisscrossing the state to promote the tourism, leisure and hospitality industries. As Senate and House budget chiefs Rob Bradley and Travis Cummings hosted a press conference after the commission meeting, DeSantis was in Fort Myers hosting a roundtable on restaurants.

“I think the Governor is spot on, and I think the Legislature needs to do what they can to continue to be a part of the tourism industry,” Cummings said.

The Governor has backed VISIT FLORIDA and reiterated its importance in a crisis like a pandemic, even after outgoing House Speaker José Oliva has resisted funding the state tourism marketing arm.

Bradley, who is leaving the Legislature after being termed-out in the Senate, encouraged lawmakers to continue progress on making Florida’s economy more resilient.

“The more we can diversify our economy, this pandemic reminds us again of how important it is to diversity,” he said.

With unemployment rising from a near 50-year low to a near 50-year high in April or soon after, even extreme increases in the job market will take time to recuperate.

Jobless Floridians will receive an extra $300 per week for at least three weeks thanks to the Federal Lost Wages Assistance program, but the benefits amount will soon revert to the state’s cap of $275 a week for a maximum of 12 weeks.

When federal assistance dries up, he said lawmakers should rethink the unemployment benefits. Invoking the Governor’s media appearances dating back to April, Bradley emphasized that Floridians lost their jobs through no fault of their own.

“As long as we’re in a situation in our society where that is the reality for Floridians, then you need to look at the rules to make sure that they are compassionate and consistent with how we treat our fellow human beings, including length of time and amount,” Bradley said.

He suggested no amount, leaving that up to the next batch of elected officials to hammer out.

Democrats have continuously called for DeSantis to increase benefits or for the Legislature to step in with a Special Session to make a change. Sen. Gary Farmer, the Democratic Leader-designate, also didn’t specify a value or extension his Caucus might suggest but assured that Democrats would be filing legislation to increase benefits.

Pressure is also falling on Washington to back up states with a new relief package that provides further funding and clarifies and extends how states can use funds from the CARES Act. U.S. Sen. Marco Rubio on Thursday tweeted that Congress won’t pass more pandemic aid before the November election because of partisanship, blaming Democrats’ federal leaders.

However, Bradley was optimistic, regardless of who wins the presidential election, that the federal government would step in with more funding. That funding, Baker indicated, was critical for keeping Florida’s financial situation from worsening.

“There is going to be a reckoning coming into next fiscal year as some of these states deal with challenges that are much greater than ours,” he said. “The federal government, I’m confident, is going to at some point in time — maybe it’s not before the election because politics being what they are — that they’re going to be helpful to the various states.”

Even in the face of a $2.7 billion shortfall, the pair of outgoing legislative budget negotiators expect the state can survive the recovery from the recession with little pain. DeSantis cut more than $1 billion from the state’s 2020 to 2021 budget, and Florida hasn’t yet needed to touch the Budget Stabilization Fund despite revenues in the previous fiscal year ultimately coming in $3.4 billion below expectations.

The Governor has said the pandemic will “loom” as lawmakers consider the next budget.

Cutting the state’s responsibilities for the Lawton Chiles Endowment Fund could save $304.7 million, and striking a deal on a new Seminole Gaming Compact could bring in another $350 million in recurring annual revenue. The Legislature has “many mechanisms” to reach the $2.7 billion in cuts, Bradley added.

“What I hope doesn’t happen is that large-scale cost changes aren’t made going forward using this as an excuse, because the fact of the matter is we have structural integrity in the decisions that have been made,” Bradley said. “Some tough decisions need to be made, but it’s not dire.”

Written By

Renzo Downey covers the Florida Legislature for Florida Politics. After graduating from Northwestern University in 2019, Renzo began his reporting career in the Lone Star State, covering state government for the Austin American-Statesman. Shoot Renzo an email at renzo@floridapolitics.com and follow him on Twitter @RenzoDowney.

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