June 5, 2023

Ian recovery helps boost tax collections

TALLAHASSEE --- Hurricane Ian recovery efforts helped state general-revenue tax collections in December that topped projections by 14.9 percent.

But in a report released Tuesday, economists continued to express concerns about inflation, Floridians digging deeper into personal savings and conditions in the housing market.

Net general revenue collections in December totaled $4.083 billion, about $530.5 million over a projection issued in August, according to the report released by the Legislature’s Office of Economic & Demographic Research. The report indicated recovery and rebuilding efforts from the late-September Category 4 hurricane gave a $122.7 million boost, “with about one-half of the total related to the purchase of autos.”

For December, sales-tax revenues on auto sales beat the August projection by $98.1 million, or 20.5 percent. Sales taxes on building materials and costs were up $34.4 million, or 19.8 percent, from the forecast.

Also, corporate income-tax collections topped a projection by $322.3 million.

Meanwhile, documentary-stamp tax collections on real-estate transactions were 27.3 percent below expectations, due to “higher than expected mortgage rates and weaker than expected housing market prices,” the report said.

At the 2023 Florida Real Estate Trends summit in Orlando on Jan. 19, Florida Realtors Chief Economist Brad O’Connor said he expects the housing market to be more reflective of the pre-COVID-19 pandemic years as “supply and demand become more balanced.”

“So, it’s true some owners are feeling locked in to their current home and current mortgage rate, but it’s not all homeowners,” O’Connor said. “We are seeing gains in inventory --- active listings --- and closed sales are continuing. And we are going to see some relaxing or easing in prices, but we’re not going to see a great drop unless or until we see more supply available.”

The Federal Reserve has raised interest rates to try to curb inflation. Tuesday’s report by the state economists said the Consumer Price Index for an “all-items” index increased 6.5 percent for the 12 months ending in December, which while “still elevated, it is the smallest 12-month increase since the period ending October 2021.”

As an example, prices for food eaten at home increased by 11.8 percent in December, down slightly from 12 percent in November.

Inflation has helped increase sales-tax collections, as taxes are applied to higher-priced items.

The economists have repeatedly pointed in recent months to Floridians tapping into savings to pay expenses. For December, they put the personal-savings rate at 3.4 percent, up from 2.9 percent for November.

Before the COVID-19 pandemic, the savings rate in the 2018-2019 fiscal year was 7.9 percent. The rate jumped to 33.7 percent in April 2020 as people cut back on spending during the early months of the pandemic and started receiving federal stimulus checks.

General revenue is closely watched because it plays a major role in funding schools, health-care programs and prisons. Gov. Ron DeSantis is expected in the coming days to release a proposed budget for the state’s 2023-2024 fiscal year. Lawmakers will use that proposal as a starting point as they negotiate a final spending plan during the legislative session that will start March 7.

Tags: News Service of Florida

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