A top Florida economist told lawmakers Thursday that financial problems could linger for a couple of years because of the resurging coronavirus pandemic, as first-time unemployment claims tripled in the first full week of 2021.
Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said that while many business sectors experienced “very sharp snapbacks" from the pandemic’s initial hit last spring, uncertainty remains about the recovery of the state’s vital tourism industry and the future of commercial real-estate space.
“We were seeing over the summer definite improvement in our sales tax collections, at least thinking about it year over year,” Baker told members of the Senate Appropriations Committee. “But as we've moved into the fall, as we're looking at the December numbers and some of the very early January numbers, we know that the resurgence of the coronavirus is causing people to start to draw back a little bit.”
Baker’s presentation came after the U.S. Department of Labor on Thursday released a report estimating that first-time unemployment claims in Florida leaped to 75,444 last week, up from 24,697 during the week that ended Jan. 2. Last week’s total was the largest one-week number since mid-August.
Weekly claims had been hovering around 25,000 for the past two months. The increase came after a steep increase in the fall and early winter of COVID-19 cases and deaths in Florida.
The economic damage caused by the pandemic has led to sharp reductions in projected tax revenues. Legislators face about a $2.75 billion shortfall as they prepare to piece together a 2021-2022 budget during the annual legislative session that begins March 2.
Officials hope shaky consumer confidence will improve when the state has widespread distribution of COVID-19 vaccines, which could occur this summer, Baker said.
Baker said the state has seen an uptick in real estate documentary-stamp taxes, a sign that construction and housing sales --- spurred by low interest rates --- were up as people relocated from New York and some western states.
But along with leading to reduced revenue projections, the economic fallout of the pandemic has caused such things as a major increase in the number of people enrolling in Medicaid for health care.
Senate Appropriations Chairwoman Sen. Kelli Stargel, R-Lakeland, said her committee will have to quickly determine if people will remain on Medicaid rolls when work returns, what school populations will be when students fully return to in-class instruction and how much commercial office space will be needed.
“We obviously have limited resources. And what we do want to have going forward is certainty to the people of the state of Florida that we've handled our work effectively, so that they can have certainty that we're going to be there for the needs that they have in this state, which is going to require us to look at what's the core functions of government,” Stargel said. “What do we need to be providing to our citizens? We need to make sure that we're providing that and then make sure that we have a buffer for the future of unknowns that we really do not know.”
On Wednesday, Senate Education Appropriations Chairman Doug Broxson, R-Gulf Breeze, expressed concern that growing Medicaid demands will require using money from other areas of government.
“We’ve got a growing need in Medicaid, it’s going to be over a billion dollars more than we anticipated. And according to the feds, none of those (people) that have been added can be rolled off (the program), no matter what their financial circumstances are --- so we’re stuck with that number and growing,” Broxson said.
Florida had a 6.4 percent unemployment rate in November, representing 651,000 people out of work. The state Department of Economic Opportunity is slated to release a December report on Jan. 22.
Baker cautioned that, with some people no longer actively seeking work, meaning they aren’t counted as unemployed, the jobless rate “effectively, is probably worse.”
“We talked a lot about this coming out of the Great Recession and we're seeing kind of this same phenomena right now,” Baker said. “Florida's participation rate is very low.”
The state lost 1.2 million jobs during the first wave of the pandemic, of which about 60 percent have returned.
Since mid-March, the Department of Economic Opportunity has received about 5.26 million unemployment claims, including duplicates. From those applications, nearly 2.18 million claimants have drawn state or federal payments totaling $20.2 billion. The state’s share has been $3.9 billion.
Democratic lawmakers this week filed proposals (HB 207 and SB 592) they contend will improve the online CONNECT unemployment system, which was overwhelmed in the spring by claims. The system drew widespread criticism, including from Gov. Ron DeSantis and some other Republicans.
“Some of my Republican colleagues have not addressed the issue yet, but I would believe that this is an issue that cannot be ignored,” Senate bill sponsor. Bobby Powell, D-West Palm Beach, said during a Zoom call with reporters. “And I believe that on this (Senate) side we will be able to move the legislation, have some conversation centered on what has happened with unemployment. And I'm hopeful, and I remain cautiously optimistic, that if we can't pass the entire bill, we would definitely have pieces of it implemented throughout the legislative process because it's a comprehensive bill.”
The proposal would increase from $275 to $500 the top amount of unemployment assistance people can receive weekly, extend the number of weeks benefits would be available to 26 and create an ombudsman office to help people trying to navigate the system.
The number of weeks in which jobless Floridians can receive state benefits has already gone from 12 weeks to 19 weeks.
State law holds the number of weeks at 12 when unemployment is at or below 5 percent, with an additional week added for each 0.5 percentage point above 5 percent in the third quarter of a calendar year. High unemployment rates after the pandemic hit triggered the increase to 19 weeks under the formula.
--- Staff writer Ryan Dailey contributed to this report.