Senate Finance and Tax committee hears staff overview showing stable revenue growth and concentration in sales tax

TALLAHASSEE — The Florida Senate Committee on Finance and Tax on an overview of the state’s tax system and revenue forecast, staff director Azar Khan told members that Florida took in about $127 billion in total revenue in fiscal year 2023–24, including roughly $48 billion in general revenue, and that sales and use taxes remain the largest single general-revenue source.

Khan, the committee’s staff director, told senators the state received nearly $36 billion of sales-and-use tax in 2023–24 and that sales tax plus four other sources account for about 95 percent of general revenue. He said transfers from the federal government were nearly $40 billion, state trust funds received about $32 billion, and roughly $7 billion was shared with local governments.

The presentation placed Florida near the bottom of per-capita state revenue rankings in Tax Foundation data, while Census Bureau data show Florida first in business-formation applications. Khan said those facts are likely related to the state’s overall business climate and in-migration but cautioned that multiple factors — population growth, tourism, housing and construction activity — feed revenue forecasts.

Khan summarized the largest tax rates and near-term drivers: a 6 percent state sales tax (2 percent for the business rent tax on commercial leases), a 5.5 percent corporate income tax (after a $50,000 liability threshold), a documentary stamp tax of $0.70 per $100 of value, and an insurance premium tax of 1.75 percent. He said earnings on invested state balances have grown — roughly on the order of $1 billion in recent discussion — because of larger cash balances and higher Treasury yields, but cautioned those gains may not persist as rates and balances normalize.

Khan reviewed the revenue-estimating process: three revenue estimating conferences per year that require agreement among four principals (senate, house, the Office of Economic and Demographic Research and the governor’s office). He showed 20-year trends in general revenue, noting that general revenue collections have about doubled over two decades and that COVID-era anomalies are normalizing toward the long-term trend.

The director also described smaller and more volatile sources. He attributed a projected near-term decline in insurance premium tax receipts to a one-year credit enacted in last year’s tax package; lower cigarette consumption for a decline in tobacco tax revenue; and reduced severance-tax collections to lower solid-mineral mining activity. Khan said many minor sources are otherwise stable and that corporate filing fees have increased alongside business-formation activity.

Senators asked questions about forecasting drivers and differences between revenue and appropriation projections. Khan confirmed population and tourism are explicitly modeled, and that construction and auto sales are important inputs. In response to a question about apparent disagreement with a statewide briefing by the state economist, Khan said he and the state economist were working from the same revenue forecasts; his remarks emphasized that the tighter fiscal picture discussed elsewhere stems from rising recurring appropriations rather than weaker revenue assumptions.

Committee members also asked about investment returns. Khan said the Department of Financial Services manages state cash to meet short- and medium-term needs while seeking higher returns when feasible; he cautioned that the unusually high investment returns observed while Treasury yields were elevated may not continue.

Khan closed by noting that tax packages in recent years have grown in size — historically $100 million–$200 million before 2022, and substantially larger in 2022–24 — and that the governor’s proposals released earlier in the week were under review.

The meeting record shows Senator Passadomo moved to adjourn; the chair called for objections, heard none and the motion was adopted.