Tuesday, October 20, 2020

COVID-19 Impacting Fiscal Policy Within the State & Locally

The Coronavirus (COVID-19) is not only having an impact on the health of individuals but also on the health of the economy around the State of Florida and here locally on Marco Island. The shutdowns of restaurants, lodging and other businesses across the area will result in a substantial reduction in the income received from sales tax revenues.

On Friday, the Governor also ordered all short-term rentals suspended for the next two weeks to reduce the numbers of visitors coming into the state and the boom they bring with them from purchases during their stays which flow into the state sales tax coffers.

Just this last Thursday, the Florida State House of Representatives passed a $195 million tax breaks to certain targeted companies within Florida. That will come in addition to other plans to continue other tax breaks already in the pipeline.

Florida is heavily dependent on a healthy tourist industry and the slowdown in the sales tax dollars will have a huge impact on what funds are available for dispensing to local communities. Those funds are needed for state infrastructure projects in addition to huge dollars required to address the water quality issues within the state that our present Governor has been a strong supporter of.

Although the state’s reserves may be healthy today, they certainly will be impacted by the COVID-19 crisis, as Florida will be called upon to support the efforts of the counties and municipalities within the state as they are impacted by the virus.


On Marco Island, several large capital projects may be impacted by this recent turn in events and city leaders may well have to address the potential for the downturn in revenues. The normal return to the city regarding sales tax revenues is likely to have a substantial impact on spending during the present 2019-2020 budget cycle which took effect in October of 2019. No one at the city level could have anticipated the events that came about six months after the approval of the budget, however, they will be responsible for addressing the shortfalls.

Photos by Steve Stefanides | Station 50.

In addition to those reductions, the county’s 1% special sales tax which was enacted last year may well be seriously impacted. That would have provided Marco City leaders with an unexpected windfall following the passage of the referendum for the 7-year 1% add on for capital projects. 

A review of projects presently in the pipeline may be required, no matter how painful. “I think it would be a prudent course of action for council to look at all potential savings and opportunities,” said Council Chairman Erik Brechnitz when asked about the potential for reduced revenues.

Marco will not be the only community within Florida to suffer. Counties, as well as the state programs, will also have their budgetary numbers impacted given the fact that the state relies on over $6 billion a year from tourism.

Legislators will no doubt be called back into session to deal with the budget issues before sending it over to the Governor, as they are responsible for providing him with a balanced budget.

The Governor will be looking closely at that budget when the legislature forwards it to his desk for review. He will no doubt be exercising his line-item veto power as he reviews hundreds of millions of dollars for projects when that budget reaches his desk.

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