Florida’s red-hot revenue streak continued in November, as the state pulled in nearly $3.63 billion, or $447.2 million more than state economists predicted. That’s according to a monthly revenue report released by the Office of Economic and Demographic Research.
Sales taxes made up the bulk of the overage, as the $2.9 billion in sales taxes collected was $412.1 million over the estimates. The large haul is another sign Florida’s economy isn’t slowing despite persistent high inflation.
Also, the devastation brought by Hurricane Ian on the state, especially in Southwest Florida, helped to pad the coffers as rebuilding efforts got underway. The report shows revenues collected in November, but mostly reflects economic activity during the previous month. Hurricane Ian hit Sept. 28. Economists estimate the recovery effort added $104.8 million in sales taxes, much of it from the purchase of vehicles.
As inflation shot up it helped pad Florida’s sales tax-reliant revenues, which beat monthly expectations for most of the year. Still, economists remain cautious about the effect high inflation — at rates above 8% for much of 2022, a level not seen for 40 years — will have in the long run.
“The immediate response to inflation is an increase in sales tax collections that reflects the higher prices,” the report states. “Persistent inflation conditions, however, ultimately suppress collections as consumers begin to spend more money on non-taxable necessities like food and health care. In this regard, prices for food at home increased by 12.0 percent in November, slightly down from the 12.4 percent in October.”
Another caution sign could be document stamp tax revenues, which come from real estate transactions. They came in at $104.3 million, or $32.8 million below estimates. The Federal Reserve has ratcheted up interest rates throughout the year to try to combat inflation, punching up the cost of loans for homes and other large items.
Earlier this month the key benchmark interest rate was raised to 4.5%, the highest in 15 years. The benchmark rate started 2022 at 0.125%.
In the first four months of the fiscal year, the state collected $1 billion more than economists’ projections.