Florida economists Friday warned that “uncertainty exists” as they increased general-revenue projections that lawmakers will use in negotiating a new state budget.
A panel of economists known as the Revenue Estimating Conference updated general-revenue projections, which were last issued in August, by about $1.3 billion for the current fiscal year and next year.
But in an executive summary of its report, the panel pointed to “weaker” state and national economic variables and said the “forecasting environment is considerably less stable over the short run than it was in the summer. Further economic uncertainty exists from this point forward.”
Economist Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said the new revenue forecast comes with “a strong caveat” that the “greatest risks going forward are all to the downside.”
“There's a lot of uncertainty on how things are going to unfold, both at the federal level, and that includes not only new policies that are being put into place, but also, what is the Federal Reserve going to do next,” Baker said.
The Revenue Estimating Conference meets periodically throughout the year to update projections of general revenue, which includes such things as sales taxes and plays a critical role in funding schools, health programs and prisons. Lawmakers will use Friday’s estimates in crafting the fiscal year 2025-2026 budget, which will take effect July 1.
Legislative leaders have repeatedly said spending in the budget won’t be as robust in past years, in part because federal COVID-19 pandemic money is no longer available.
In August, Baker said some economic uncertainty remained about consumer saving levels and global issues, such as conflicts in the Middle East that could have a spillover effect on oil and gas prices.
Now, concerns include the Trump administration’s decisions to cut government operations and impose tariffs on traditional trading partners.
The state economists added $768.3 million to projected revenue for the current fiscal year, which started July 1, and $503.5 million for the 2025-2026 fiscal year. The gains are based on sales-tax revenue that has mostly come in higher than anticipated in August and higher-than-expected earnings on state investments.
"I think uncertainty in and of itself causes people to, you know, kind of hunker down," Baker said. "In addition to that, you know a lot of folks have money that's at least tangentially in the stock market. Retirement bonds, 401(k)s. So, they watch those balances. They feel those balances coming down. They know that it's a time of uncertainty. They feel less wealthy. They feel less better off as a result of that."
The sales-tax estimate was increased by $510 million for this fiscal year. An increase of $385.4 million was added to the forecast for 2025-2026.
Meanwhile, projected revenue from corporate income taxes faced the biggest reduction --- $221.8 million --- over the two years.
The state’s figures, in part, reflected survey numbers by the University of Michigan, which on Friday indicated national consumer sentiment reached its lowest reading in over two years.
“The sentiment numbers are the latest sign of worry caused by (President Donald) Trump’s trade wars alongside sustained drops in the stock market as investors react to the fallout from higher tariffs on China, Mexico and Canada, and on steel and aluminum from U.S. allies,” Joanne Hsu, director of the survey, said in a news release. “There’s also the prospect of more duties on countries across the globe.”
Last week, the University of Florida’s Bureau of Economic and Business Research found a “sharp” decline in consumer confidence among Floridians after three consecutive months of increases following the November presidential election.
