Sun Sentinel Palm Beach Edition
Florida tourism may take up to three years to recover
Economist: Tourists not likely to flock to area until a year after a vaccine is public
TALLAHASSEE — Florida’s tourism industry will be the slowest sector to emerge from the recession caused by the coronavirus, dragging down the overall economy, the state’s top economist told lawmakers Thursday.
Tourism accounts for 13% to 15% of the state’s main revenue fund, Florida chief economist Amy Baker said, and tourists aren’t likely to start flocking back to the Sunshine State in pre-pandemic numbers for at least a year after a COVID-19 vaccine is available to the public, which isn’t expected until next summer.
“Our belief is that tourism is going to take two to three years to recover, and it will be the longestrecovering sector that we have,” Baker told the Legislative Budget
Commission.
Baker was presenting state economic forecasts for the next three years, known as the Long Term Financial Outlook, a document lawmakers use to make budget decisions in upcoming years.
The forecast revealed dramatic differences from the previous estimates. Florida is projected to have a $3 billion deficit for the fiscal year that begins July 1, 2021, and will be $2.4 billion short the following year.
Florida’s unemployment rate, which stands at 11.3% as of July, isn’t expected to fall to 6% until April 2023.
The high unemployment will contribute to higher Medicaid costs, especially in the current year, as laid-off workers no longer receive health insurance from their employers.
Despite the dire forecast, Gov. Ron DeSantis had a more upbeat outlook during a meeting with restauranteurs in Fort Myers on Thursday.
“We have had a lot of places in Florida that have done very well this summer, which is a good sign,” DeSantis said. “There’s been some other places not as much, but I do think that I think the theme parks are picking up steam. I think they’ve done a really good job. And so hopefully we’ll get the Central Florida [area] going some more.”
Sen. Rob Bradley, who contracted COVID-19 in the summer but recovered, acknowledged the large budget gaps that exist but said the Legislature has a variety of tools, combined with federal assistance that could help reduce the need for large cuts.
He mentioned Florida’s ability to issue bonds, which was largely unused under DeSantis’ predecessor, Rick Scott, because of his antipathy for debt, and the $4 billion in reserves that cushioned the initial coronavirus crunch.
“The fact of the matter is, the fundamentals for this state budget continue to be strong, and that’s not being pie in the sky — that’s continuing to listen to experts,” Bradley said. “This year we’re going to be fine. Next year there are going to be short-term challenges but keep in mind [the Legislature] has a lot of tools at their disposal because of the decisions that have been made.”
DeSantis has $5.8 billion in federal money from the CARES Act passed by Congress to use for pandemic response expenses. That money isn’t supposed to be used to make up for revenue losses, but Baker said there could be some flexibility given to states through additional coronavirus relief bills being discussed in Congress.
In addition, DeSantis is already withholding 6% of state agencies’ authorized budgets this year — something he is permitted to do under the constitution — which could ease the budget crunch.
Bradley also noted that lawmakers could pass a new gambling compact with the Seminole Tribe, which could net the state $350 million or more per year, although before the pandemic even lawmakers in favor of a new compact said it wouldn’t be used to balance the state’s budget.
But Democrats countered that those options won’t fully make up for the shortfall and already involve reductions in services for Floridians.
“A 6% cut to an already strained behavioral and mental health budget — that creates pain,” said Sen. Gary Farmer, D-Lighthouse Point. “And we are seeing a great increase in the need for services. People are scared, people are depressed, people are lonely and isolated. They need more help right now, not less.”