Rep. Paul Renner, the Palm Coast Republican who represents Flagler County and portions of St. Johns and Volusia, is warning of a “massive shortfall” that will constrain budget decisions when the next legislative session begins on March 2, and that portends steeper challenges than he’s seen in his six years in office.
Renner’s assessment contrasts sharply with a much rosier-than-expected–and much larger– budget of $96.6 billion Gov. Ron DeSantis is proposing, increasing the current budget by $4.3 billion. DeSantis is banking on huge sums of federal dollars to bankroll some of the increase. But DeSantis’s budget also relies on some deceptive numbers.
For instance, while proposing a $285 million increase in public school funding, he is calculating the state’s education budget based on 88,000 fewer students who registered for K-12 fall classes, even though there’s little doubt that the students will gradually return to school as the year progresses. The DeSantis budget also undercounts the growing ranks of Medicaid enrollment, the health program for the poor, since the pandemic struck: a fifth of the state’s population is expected to be on Medicaid by 2022. DeSantis is also proposing raiding more trust funds of dollars intended for specific purposes and bonding (that is, borrowing $413 million).
Rosy or not, DeSantis’s budget is only advisory. It’s the Legislature’s responsibility to pass one, and this year Renner–who is slated to be House Speaker next year–is chairing the powerful House Appropriations Committee (along with the Rules Committee). Florida’s next budget, in other words, will have Renner’s imprint.
“While we’re doing better than other states, other states are doing really, really poorly,” Renner said in an appearance on WNZF’s Free For All Fridays. “We’re still looking at a deficit that’s just shy of $3 billion. So that is improving, the budget picture has steadily improved, but we’re still going to have a massive shortfall. For perspective, that’s worse than any year that I’ve been in the Legislature. We had some tough years with hurricanes that cost a billion dollars to recover from.”
In August, the state’s Revenue Estimating Conference, a group of economists who calculate budget projections for lawmakers, was projecting a $5.4 billion deficit over two years, in a budget currently at $92.2 billion. That rapidly improved to $3.3 billion by December, and again to $2.75 billion when the panel met last month, pointing to a more encouraging trend ahead. Still, that leaves lawmakers–who are constitutionally bound to adopt a balanced budget–facing the kind of shortfalls that may rival but not exceed those of the Great Recession more than a decade ago. (In 2011, the Legislature faced a $4 billion deficit.)
Renner cited his experience with budget hits from hurricanes. “This is far worse than that, and while our economy was exceptionally strong coming into the coronavirus, it took a dip, because we basically shut it down,” he said, “we ordered everybody to stop working, to stop generating that wealth that [generates] tax revenues, so we have a hole to come out of. We have to do that responsibly, and the last thing we should do when people are struggling with their own personal budget is ask them to do more, is ask them to take a little bit of money they do have to cover their budget needs and take it away from them in the form of tax increases. So we’re going to pare back and prioritize, which is our job to do.”
He did not specify how, but cautioned against relying on federal aid. “There is a perspective that the federal government will simply write checks to the states and to local governments to make their problems go away,” he said. That’s not incorrect: the government is providing significant aid through the CARS Act and its successors. But that remains borrowed money that could cause financial issues in the long run. Renner said he can “get on board with a lot of Covid relief, checks to individuals, try to help them through this crisis, unemployment assistance,” and aid to small businesses. But he thought differently about “bailing out states that have massive debts.” Relief should be targeted to immediate shortfalls, not shortfalls predating covid’s effects. But that’s DeSantis’s approach to federal aid: it’s covering current shortfalls.
Florida’s tourism industry has been most severely hit among economic sectors and may not recover for years. But there are brighter spots, statewide and locally. Realtors, Renner said, are running out of homes to sell. “People are voting with their feet, coming to Florida in significant numbers, more significant than they have perhaps in the past,” he said. “So we’re seeing people from all over the country moving into Flagler County. St. Johns County, Volusia County are also experiencing significant growth, they’re counties I also represent.”
In December, for example, the Flagler County Association of Realtors reported that 30 percent more single-family house sales closed, compared to a year ago, with a median sale price of $264,000, up 4.3 percent from a year ago. The median time to a contract has fallen from 44 to 36 days. Most strikingly, active listings have fallen by half, while the supply of homes has dwindled to 1.8 months’ worth, down from 4.3 months a year ago, and 5 months in 2016. There is no question that there are fewer and fewer houses to sell, even as permitting and construction activity has risen sharply in the last two years.
Renner also cited cited Boston Whaler, Jacksonville University and the University of North Florida’s arrival in Palm Coast as local economic engines to come. “These types of things are going to really bring a lot of wealth and allow us to address our infrastructure needs, to address many, many needs in our community that we just simply can’t do by just looking at government to try and fund it,” he said.