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Coronavirus stokes worry over Florida economy, state budget

March 10, 2020 GMT
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Lobbyists start to fill the fourth floor gallery between the House and Senate as session starts to consider the budget Tuesday March 10, 2020, in Tallahassee, Fla. (AP Photo/Steve Cannon)
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Lobbyists start to fill the fourth floor gallery between the House and Senate as session starts to consider the budget Tuesday March 10, 2020, in Tallahassee, Fla. (AP Photo/Steve Cannon)

TALLAHASSEE, Fla. (AP) — The spread of the new coronavirus has stoked worries about Florida’s economy, prompting lawmakers to rethink spending on big-ticket items as negotiations continue over the state budget.

Legislative leaders voiced concerns this week that the virus could drag down the state’s economy — and take some of the budget proposal with it, including teachers pay.

House Speaker Jose Oliva raised the specter of a recession, even if obliquely, while addressing his chamber Monday.

Later, Senate President Bill Galvano recommended a more cautious approach.

“I don’t want to overreact and then just doing a massive U-turn because of potential impacts of this virus,” Galvano said in an impromptu meeting with reporters Monday. That same day, Gov. Ron DeSantis proclaimed Florida in a state of emergency and the legislative session was temporarily disrupted by concerns about a possible virus contamination in the House chambers.

Possibly on the line were an ambitious plan to boost the minimum pay of thousands of teachers statewide, as well as a tax package and more than $500 million in tax refunds for corporations.

For now, agreements already reached on $370 million in affordable housing funds and 3% across-the-board raises for state workers appeared safe.

Worries about a possible virus-induced recession are likely exaggerated, according to professor Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting.

“It’s probably overblown in terms of the threat of a recession,” Snaith said. But he acknowledged he understands why legislators may be taking a more cautious approach. “They don’t want to get caught with a shortfall.”

Tourism dollars have a big effect on the state’s economy and on government revenues. In 2017, tourism spending amounted to $88.6 billion and generated $11.4 billion in state and local tax revenues, according to a study by Rockport Analytics.

Some conferences, concerts and other large events have already been scrapped. Advisories about taking trips on cruise ships and avoiding long-haul flights could keep visitors away.

“Three months from now people are going to be looking back on this and maybe realizing that it wasn’t really this black swan event that was going to push us into a recession,” he said, “but more of an ugly duckling.”

The Legislature had been scheduled to adjourn by Friday but will return next week to finalize a budget to send to the governor for his signature.

Going into budget negotiations, there was a $1.4 billion divide between proposals presented by the House and Senate. In the end, the state budget is expected to weigh in at about $91-$92 billion.

When he unveiled his budget proposal last fall, DeSantis requested $600 million to boost the minimum salary for teachers to $47,500, and an additional $300 million for bonuses.

Lawmakers balked at granting the governor’s bonus plan. During budget negotiations over the weekend they appeared to settle on $500 million for teacher raises.

Other spending agreements had already been reached, including $100 million for the Florida Forever land conservation program and $650 million for Everglades restoration and water quality improvement projects.

State workers will be getting 3% across-the-board raises, and housing advocates cheered when lawmakers included $370 million for affordable housing programs.

Last week, the Florida House passed a $193 million tax cut package benefiting businesses and corporations as well as give consumers a sales tax holiday for school and hurricane supplies. But that amount could now be scaled back.

While the governor had asked for $25 million from lawmakers to respond to the spreading virus, Galvano said it might take much more state resources — suggesting that he’d be willing to set aside $200 million in reserves, should more resources be required to address the virus.

“We are looking to see if there’s some way we can better prepare, maybe rethink some of these expenditures that are on there way down the pike. It could mean a different number for teacher pay,” Galvano said.

Andrew Spar, the vice president of the Florida Education Association, joined the governor in urging urged lawmakers to not turn back.

“We hope and expect that lawmakers will continue with the commitment that they’ve made,” Spar said. “There are other things that lawmakers they can look at to find the revenue they need to cover the coronavirus.”

At his news conference Monday, DeSantis said teacher pay was not the place to look for cuts.

“At the end of the day, it’s not a huge part of a $91 billion budget,” the governor said. “We can absolutely walk and chew gum at the same time.”

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Associated Press writer Brendan Farrington contributed to this report.

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