Florida’s general-revenue tax collections came in nearly 20 percent higher than anticipated in July. A report issued Wednesday by state economists said general revenue was $516.1 million more than projected.
Sales taxes are the biggest part of general revenue. Inflation played a key role in driving up sales-tax collections in July, as it boosts shelf prices and, as a result, tax money.
“The immediate response to inflation is an increase in sales tax collections that reflects the higher prices,” the report said. “Persistent inflation conditions, however, ultimately suppress collections as consumers begin to spend more money on non-taxable necessities like food and health care.”
The report said prices for food eaten at home increased by 13.1 percent in June, contributing to the largest 12-month percentage increase since the period that ended in May 1979. Economists also warned about relatively low consumer savings.
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The personal-savings rate stood at 5 percent for June and July. Before the COVID-19 pandemic, the rate in the 2018-2019 fiscal year stood at 7.9 percent. The rate ballooned to 33.7 percent in April 2020 as people cut back on spending and started to draw federal stimulus checks. In all, the state collected $3.327 billion in general revenue in July, up from the projection of $2.811 billion.
The July collections were compared to projections made by economists in January. A panel of economists known as the Revenue Estimating Conference updated projections this month.
The panel bumped up projected general revenue for the current 2022-2023 fiscal year and the 2023-2024 year by about $5.3 billion. The 2022-2023 fiscal year started July 1.
The increased projections, however, came with concerns about an economic “downshift” this fiscal year and an anticipated slowdown in the housing market. General revenue is closely watched because it plays a key role in funding programs such as education, health care, and prisons.