TALLAHASSEE - Florida lawmakers are looking to build reserves by cutting spending as the state reacts to the threat of the novel coronavirus and a plunge in the stock market.
Floridians could also expect fewer tax breaks from a package the House approved last week as legislative leaders hammer out the final details of an estimated $92 billion budget for next fiscal year.
“What we’re going to see now, from here on out and into the summer, is probably a difficult economy,” House Speaker Jose Oliva, R-Miami Lakes, told reporters late Monday.
That means shifting planned spending into reserves for a budget that could be finalized in the next couple of days.
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Oliva’s comments came after Gov. Ron DeSantis declared a state of emergency that broadened his powers to respond to the coronavirus, known as COVID-19, and after lawmakers over the weekend agreed to funnel $25 million to fight the spread of the virus.
Senate President Bill Galvano, R-Bradenton, told reporters Monday that money for teacher pay raises and proposed tax cuts could be trimmed.
The House and Senate appeared to agree Saturday to spend $500 million to increase teacher salaries, an issue that is a top priority of DeSantis. A day later, the Senate proposed upping the amount to $600 million.
But legislative leaders were again weighing how much to spend on the raises Monday, as the coronavirus threatened to reduce tax revenues from industries such as tourism and cruise ships.
Galvano said lawmakers could put additional money into reserves "in case we need to utilize it from an economic standpoint or to stabilize our budget.” He suggested that the additional money going into reserves could top $200 million.
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Oliva also said teacher pay raises could be hit.
“That’s one of the largest recurring expenditures that has been proposed this year,” Oliva said. “I think it has to be looked at.”
He also noted a planned $100 million for the Florida Forever conservation program could be reduced.
The House tax package (HB 7097), which would offer $115 million in savings next fiscal year, would provide sales-tax “holidays” before hurricane season and the new school year. It also would trim sales taxes on commercial leases by 0.1 percentage point, to 5.4 percent, and reduce the communications services tax, collected on things such as cell phones and cable and satellite television, by 0.5 percentage point.
The communications services tax cut is projected as a $24.9 million savings next fiscal year, growing to $59.7 million a year.
Several Democrats criticized the package for failing to end a 2019 corporate income-tax refund that could be worth up to $540 million next year. Also, Democrats questioned portions of the package such as an aviation-fuel tax cut and a one-time $2 million tax credit for rental car companies that Republican said is needed to offset increases in corporate income taxes that arose from a 2017 federal tax overhaul. The federal tax overhaul eliminated a tax break that allowed car rental companies to put off paying taxes on income from selling vehicles.
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House Ways & Means Chairman Bryan Avila, a Miami Springs Republican sponsoring the bill, summarized the package last week as 60 percent for households, 25 percent is for small businesses and families and 15 percent is for corporations.
The Senate has not approved a tax-cut package, with the issue expected to be worked out during budget talks.