Economists: Revenue Estimates Down Slightly, Economy Stabilizing
Florida’s tax collections are flowing in $147.1 million below expected levels, but the relatively mild shortfall left Florida economists Tuesday waving off talk that lawmakers would need a special session to patch the state budget.
When the Legislature ended the regular spring session, they left $730 million in rainy day reserves tucked into the $66.5 billion budget, creating a cushion for an economy that was then steadily falling.The $147.1 million slippage – compared with a $1.1 billion drop last spring – suggests the economy is reaching some kind of equilibrium, the four-member Revenue Estimating Conference concluded.
“I think what happened is you stopped seeing some of the shocks that kept happening,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “We went from the housing shock, through a national recession through the credit crisis to the global recession.
“What you’ve seen is for the first time we’ve had a period of time that was stable without those shocks coming in and hitting us,” she added.
With the $147.1 million drop in state revenue forecast for the 2009-10 budget year which began July 1, the state’s estimating conference is predicting $20.7 billion in tax collections.
Tax collections for 2010-11 were also shaved back by $44.2 million from the earlier forecast. But that year’s revenue forecast still is expected to grow by 6.8 percent over this year’s estimate – which economists said should mark an end to four consecutive years of declining receipts.
But with Florida’s 10.6 percent unemployment rate expected to climb further past its already 33-year high, Baker said it’s unlikely the state’s economy is on the verge of a quick bounce-back.
“You’ve got a significant number of unemployed people who can’t participate in any of this recovery right now, at all,” Baker said. “But at the same token, you have some people who have assets who are able to make investments in good housing deals which exist right now and are doing that.
“We’re seeing a recovery in the state that’s uneven, and a recovery among people that’s uneven.”
While sales tax fell $312 million below the forecast made by state economists in March, the decline was partially offset by better-than-expected yields in corporate income tax ($87.4 million more) and a boost in intangibles ($42.5 million) and documentary ($43.1 million more) tax revenues.
The rise in intangibles and doc stamp taxes stem from Florida home sales rising over the past few months, which has been helped by tumbling prices and the sale of properties in foreclosure.
But economists also warned that commercial real estate is now showing signs of being staggered by a slump rivaling that seen last year in home sales.
Commercial space is overbuilt, with many businesses closing and freeing even more space, lowering rental- and sales-prices and causing a general decline in the state’s tax collections, analysts said.
Sales of auto and vehicle parts also have climbed in recent months, even before the federal “cash-for-clunkers” program went into effect. But Baker cautioned that the federal trade-in program designed to get more fuel-efficient vehicles on the road will have little long-term effect on state revenue.
“Even though it’s causing a burst, it’s drawing out of future car sales that we would’ve seen,” she said. “It’s just moving things around more than anything else.”
Business investment was also sluggish, with companies shying away from buying new equipment or launching new manufacturing lines, economists said.
The recession, “has had spillover effects on business expenditures in Florida and has dampened commercial activity and export growth,” the conference concluded.