Posted: 4/25/2020 2:40:34 AM EDT
As coronavirus batters the economy, Florida leaders may have to slash budget
TALLAHASSEE The Republican-controlled Florida Legislature faces tough choices in balancing the $93 billion state budget decimated by the coronavirus crisis, decisions that could wipe out or drastically reduce teacher raises, road work, affordable housing projects and more.
Lawmakers last month passed the spending plan based on revenue projections made in January, well before the coronavirus brought much of the economy to a halt. When state economists make new projections, likely no sooner than sometime in May, the Legislature will know how big of a hole they have to fill.
If it is large enough, it could wipe out or significantly reduce $500 million in teacher pay raises, nearly $400 million in state worker pay raises, the boost in Medicaid reimbursement rates for nursing homes and other pieces of a budget that won so much bipartisan support the spending plan passed unanimously.
Then the options left to lawmakers are decisions that Republican leaders don't typically want to make: accept federal bailout money to fill a large budget hole; borrow money in much larger amounts than in recent years; make drastic cuts to a range of programs; or raise taxes and fees long considered unacceptable by Republican leaders.
Gov. Ron DeSantis and Senate President Bill Galvano, however, have pointed to Florida's $4 billion in reserves, the strong economy before the pandemic and the expected federal funding from the CARES Act as reasons to be hopeful the hit to state coffers won't be catastrophic.
DeSantis has even suggested the Legislature might not even have to come back the Capitol to rewrite the budget. He could sign the budget while vetoing enough projects to give a cushion that, combined with CARES Act funds, could cover any sharp drop in revenues.
"We've got to see what the economic prognosis looks like," Desantis said last week. "The numbers I've received are not anything that would cause us to have to redo the current fiscal year budget."
"And even next year, given the amount of money we've received, a lot of people feel that could be doable," he added.
But for now, the Legislature hasn't formally sent the budget to his desk, passed during the regular session that ended in March, and DeSantis has said he's solely focused on the pandemic response.
The early indications, though, suggest the downturn could be too steep, and lawmakers will need to redraft a spending plan based on more realistic revenue projections.
More than 26 million people filed for unemployment since mid-March, wiping out 10 years' worth of job gains. Retail sales for March fell 8.7 percent compared with February, according to a U.S. Census Bureau report. Industrial production fell 5.4 percent, the largest monthly drop since 1946. The Fitch Ratings agency predicted a "deep global recession" for this year on April 2.
For a state as reliant as Florida is on tourism, it points to a prolonged recovery. Florida gets 20 percent of its sales tax revenues from tourists, and 79 percent of its $33 billion general revenue fund.
The shock could ripple out beyond the hospitality sector, though, affecting parts of the budget not directly tied to sales taxes. Lawmakers opted not to raid the affordable housing trust fund this year, leaving $370 million in it, but if prospective homebuyers put off making that large purchase, it could put a dent in the real estate transaction taxes that flow into that trust fund.
Gasoline prices have plummeted as residents have been encouraged to stay home except for essential trips. That equals fewer gas taxes to pay for road work.
Galvano sent a memo to senators April 16 laying out how the CARES Act would benefit Florida, while acknowledging the abysmal economic news. Hospitals around the country will receive $30 billion; K-12 school districts will receive $770 million in grants; universities will be eligible for $792 million in grants.
"We're trying to find 127 million tourists to have the confidence to come back and patronize our state," Patronis said during a task force meeting aimed at reopening the state. "This is a one-of-a-kind enemy we've never seen before."
He's pointed to dire economic forecasts, such as a "stress test" from Moody's Analytics projecting Florida could face a $6.4 billion shortfall, combined with a $1.74 billion increase in Medicaid expenses, meaning lawmakers would be looking for $8.14 billion, or nearly 24 percent of its general revenue.
Tax increases, however, would be tricky to pass. House Speaker Jose Oliva has staunchly opposed them and DeSantis made it a campaign pledge to veto any tax increase.
Patronis has been urging state economists to convene to issue new revenue forecasts to account for the coronavirus. But Amy Baker, the state's chief economist, says they won't be able to make projections about revenues or the economy with any amount of confidence until mid-May at the earliest.
New numbers on March revenues, April unemployment figures and updated global and national economic forecasts from rating agencies won't be released until then, giving leaders little time to react to the budget hole for the fiscal budget year that begins July 1.
There will also be more decisions made in that time about when and how to reopen, which could give economists more clues as to how quickly the state will rebound.
For his part, DeSantis said he'll likely have to wield a hefty veto pen, even on programs he believes in, to have a big enough cushion to account for the economic downturn. Some projects could get funding the following year, he suggested.
FLORIDA GOP LAWMAKER SAYS 'TIME IS NOW' TO REOPEN STATE AS CORONAVIRUS CASES NEAR 30,000
Florida Chief Financial Officer Jimmy Patronis: "We're trying to find 127 million tourists to have the confidence to come back and patronize our state.''
Does Thursday's coronavirus spike reset the clock on Gov. DeSantis' plan to reopen the economy?
LYDIA SMITH APRIL 24, 2020
Republican Florida state Representative Anthony Sabatini wrote an essay arguing his state should "open all business establishments" and end the current lockdown.
The op-ed, titled "The time to open is now," was published on Thursday by several Florida-based news outlets.
Florida experienced a jump in positive coronavirus cases on Thursday, adding more than 1,000 new cases over a period of 24 hours and bringing the state's death toll to 987, according to the latest numbers from the Florida Department of Health.
At least 29,648 people have tested positive for the new strain of coronavirus, which causes the COVID-19 disease.
Sabatini wrote that Florida had "passed the peak of COVID's damage" earlier this month.
"Beginning this weekend, the Governors of Georgia and South Carolinabased on the most recent scientific dataare re-opening the economies of their states. Florida should safely follow our neighbor's lead and do the same," he wrote.
"Like Georgia and South Carolina, Florida has passed the peak of COVID's damage. According to models from The Institute for Health Metrics and Evaluation, Florida saw its peak in deaths on April 2 and its peak hospital resource usage on April 14.
"Like Georgia and South Carolina, we are on the downward trajectory of the fight against COVID. And it is time to respond to these facts appropriately."
Sabatini added: "Instead of sitting around for an indefinite period awaiting total COVID eliminationwhile our economy lays in shambleswe should begin the process of re-opening as soon as possible. The curve of the virus has been flattened and now it is time to do what's right."
He argued Florida should open all business establishments including stores and restaurants and that people should be trusted to exercise personal responsibility.
"Business owners should follow CDC guidelines. Those who are elderly and those with pre-existing medical issues should remain at home," he wrote.
"But the rest of us should return to work. Each day Florida remains closed is another day that irreparable harm is caused to the working people of our state; small family-owned businesses lost forever.
"Each hour we remain shutdown furthers the massive blow to our state economynot to mention the psychological damage that self-isolation has wrought."
Newsweek has contacted Sabatini for additional comment.
Florida's stay-at-home order began on April 3 and will remain in place until April 30.
Last week, however, Governor Ron DeSantis told local leaders in municipalities across Florida to reopen beaches as long as social distancing guidelines are followed. The Republican is currently working with the "Re-Open Florida" task force on a plan to reopen Florida's economy amid the coronavirus pandemic.
Florida Democrats said Monday that the state's economy should not reopen until more coronavirus testing is available.
"We have not won the day and cannot return to normal until testing has been expanded enormously," said state Senator Lori Berman, vice-chair of the Committee on Health Policy, the Herald-Tribune reported.
U.S. Rep. Donna Shalala, a Miami Democrat, added that "testing, testing, testing" is the only way the lockdown could be lifted.
According to the stay at home order, residents should only leave their homes to "obtain or provide essential services or conduct essential activities."
When leaving their homes, Florida residents should practice social distancing guidelines, which include remaining at least six feet away from people outside of your household.
State agrees to some 'retroactive eligibility' for unemployment benefits - The move is a partial victory for Democrats.
JANELLE IRWIN TAYLOR APRIL 24, 2020
After five days of declining coronavirus cases, Florida spiked again Thursday, raising questions about Gov. Ron DeSantis' goal of partially reopening Florida's economy May 1.
The Florida Department of Health reported 1,261 new cases Thursday, the highest number of new cases reported in a single day in more than two weeks.
Under President Donald Trump's Opening Up America Again plan, on which DeSantis is modeling his own strategies, phase one is triggered only when a state has seen declining numbers for 14 days.
Florida had been more than on track to meet that criteria before Thursday, posting fewer than 1,000 new cases per day for five days straight. April 16 and 17th saw 1,204 and 1,096 new cases, respectively, after a four-day spread with fewer than 1,000 cases, including April 14 when just 597 cases were reported. All three of those spikes corresponded to a correlated increase in testing.
That distinction, though, could be moot. Because testing is limited, in almost all circumstances, only those showing symptoms or who have had direct contact with someone who has already tested positive receive tests, meaning these weren't arbitrary tests. There would have had to have been a corresponding spike in individuals in either of those two scenarios.
That begs the question: Should the Governor reset the 14-day clock on reopening the state's economy?
The answer may very well come later. DeSantis' office is expected to receive a rough draft of recommendations from his Re-Open Florida Task Force Friday, and the group is expected to approve those recommendations early next week.
That gives at least the weekend to observe daily trends. Should Thursday's spike be an anamaly, he may make the decision to move forward despite the spike.
However, if new cases show a similar trend Friday and over the weekend, DeSantis could face calls to hit the pause button and delay his reopening strategy.
Friday's numbers are already set up to potentially match Thursday with 526 new cases reported overnight. Daily reports have trended with similar amounts in the morning and evening reports. Still, even if the caseload doubled from the morning, Friday's numbers would still be lower than Thursdays, and less than the most recent spikes before that on April 16th and 17th.
DeSantis also has some other data to make the case for not restarting the clock. The Thursday spike is not the peak. That happened on April 3 when just over 1,300 new cases were reported.
Even if case numbers hold around 1,200 over the weekend, DeSantis could argue it still represented a downward trend from the peak.
There's some other data to watch, too. One week ago, Jacksonville opened its beaches on a provisional and limited basis, but images of the first evening beaches were open showed crowds, in many cases, not following social distancing guidelines requiring six-feet of separation.
If Jacksonville begins seeing spikes in new cases, which have been declining for more than a week, that too could play into the reopening narrative. So far, the city has not seen a new spike in cases, but the virus incubation period is two weeks and test results take days to come back, meaning a potential spike is likely too soon to emerge in reports.
Similar situations are true in other areas across the state as local governments begin allowing beach access on a limited basis.
A.G. GANCARSKI APRIL 24, 2020
The many Floridians who lost their jobs in recent weeks, then struggled with the unemployment claims process, will get a lifeline.
DMS Secretary Jonathan Satter said the state "..will be affecting a retroactive period to March 9th so it would be the day of their job loss or March 9th" that jobless Floridians begin receiving back benefits, according to Action News Jax.
Satter, who took over managing the state's struggling unemployment system from Department of Economic Opportunity head Ken Lawson, has been charged with rescuing the system and the Governor's credibility on the subject of unemployment.
Democrats had called for "retroactive eligibility" for weeks, but to no avail until this week.
In early April, the Democratic caucus wrote Gov. Ron DeSantis, pushing for retroactive eligibility to the date that a given worker's job was terminated.
"Recognizing that the application system was not only out of service for much of the start of this pandemic, but continues to undergo repair, we ask for immediate action to help expedite Floridians' access to the unemployment benefits they have earned," read the caucus letter.
Democrats had asked for a retroactive date of Mar. 1. They also requested unemployments benefit be extended to independent contractors, the class of workers that receives 1099s rather than W-2s, which are not eligible for benefit under Florida law.
While there is no provision for gig workers, and Democrats did not get the extra eight days sought, the move likely can be framed as a partial victory.
There is still room to move, however.
Benefits are capped at 12 weeks with a top payout of $275 weekly, making it among the nation's most meager benefit. The Governor has expressed confidence that the $600 federal stipend will be enough to make up for any perceived coverage deficiency.
All told, 505,000 Floridians filed for unemployment last week, with 1.16 million having successfully filed since the beginning of the coronavirus crisis, out of a 10.335 million person workforce.