Monthly tax collections in Florida continue to exceed expectations, while state economists remain concerned inflation will affect consumer spending.
General-revenue collections in May topped projections by 21 percent, or $741.8 million, according to a report posted online Thursday by the Legislature’s Office of Economic & Demographic Research.
With sales taxes accounting for most of that boost, the state brought in nearly $4.27 billion in general revenue in May. Economists had earlier projected the collections would be about $3.53 billion. Since the initial stages of the COVID-19 pandemic, monthly revenues have repeatedly topped projections. During the first five months of 2022, collections exceeded expectations by $2.867 billion.
State economists continue to warn that inflation is providing a boost to the revenue figures but could eventually cause a strain. “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.” Meanwhile, personal savings, the percentage of disposable income that people save, “remained relatively steady” at 5.4 percent for May.
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The rate was up from 5.0 percent in March and 4.4 percent in April. During the 2018-2019 fiscal year, before the pandemic, the savings rate was 7.9 percent. Aided by federal stimulus money, the savings rate ballooned to 33.7 percent early in the pandemic.