Expert says Florida economy will slow as federal funds dry up

TALLAHASSEE — Florida’s hot economy will start to slow, even with better-than-expected tax revenues amid surging home sales and increased personal spending fueled in part by federal COVID19 stimulus packages, the top state economist has warned.

“As federal funds start to dry up and the stimulus effects start to pull back out, you’re going to have a decline back to normal levels,” Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said during a presentation Thursday to the Senate Appropriations Committee.

The real gross domestic product has grown to about 4.5%, but it should taper down to about 2.5% during the next few years, Baker said.

That, however, doesn’t offset a current forecast, which estimates that lawmakers will have an additional $2.6 billion to spend in general-revenue taxes, along with billions of dollars in unspent federal stimulus money, as they begin to piece together an election-year budget.

On Monday, a report from Baker’s office showed that Florida collected $327.9 million more in general revenue in August than had been projected.

Sales-tax revenues also likely will be bolstered by a new law that requires out-of-state online retailers to collect and remit sales taxes on purchases made by Floridians. Baker said early indications are that revenue from out-of-state retailers will exceed expectations of about $1 billion a year.

Senate Appropriations Chairwoman Kelli Stargel, R-Lakeland, said “what’s certain about all of this is the uncertainty.”

Lawmakers will draw up the new budget during the 2022 legislative session, which starts in January.

“I will say the state of Florida is in an incredible position compared to many other states in our country,” Stargel said. “But we do still have some challenges before us.”

At Northwest Florida State College in Niceville on Thursday, Gov. Ron DeSantis touted the state’s economy in announcing a $2.8 million grant for a diesel-mechanic training program. The money came through the state’s Job Growth Grant Fund program, which DeSantis can tap for infrastructure and workforce projects.

“If you look at Florida and where we are in relation to other states, it’s clear where other states really have fallen down over the last year-and-a-half,” DeSantis said.

The Job Growth Grant Fund was created in 2017 after a battle between lawmakers and then-Gov. Rick Scott about business incentives. For the current fiscal year, legislators put $50 million into the fund.

On Monday, DeSantis announced that more than $9 million — $3 million through the Department of Transportation and $6.4 million from the Job Growth Grant Fund — will go to improving access to the Central Florida Intermodal Logistics Center in Winter Haven. The center has long been envisioned as a key distribution point in the middle of the state.