Economists Raise Estimates, Differ on Degree
Florida’s economic picture is brightening for the first time in three years as state economists on Friday upped their revenue estimates for the current fiscal year and beyond.
But the good news that collections for the current fiscal will be $338.4 million, or 1.6 percent, more than previously expected was offset by the enormity of the task as lawmakers enter the 2010 Legislative session with an estimated $2.6 billion shortfall and that’s if it wants to fund only critical programs.
With property tax collections expected to be off by 9 percent and Medicaid costs growing, the marginal increase in collection will make a tough job only slightly easier. Collections next year are now expected to rise $312.6 million, up 1.4 percent.
Still, after nearly three years of downward expectations, economists meeting for the periodic re-tweaking for state revenue collections saw the upturn as a trend that will continue into 2012.
“It’s not that we’re disagreeing about a lot of dollars,” said Amy Baker, coordinator with the Office of Economic and Demographic Research. “Really, the question is have we turned yet or is (the recovery) right ahead of us?” And if we have turned, how fast can we move forward.?”
Fuelled by higher corporate profits and sales tax collections led by boosting auto sales, a panel of economists ratcheted up estimates last made in August when they last meet. Going forward, the economists from the governor’s office, the Department of Revenue and the Legislature agreed that revenue growth would jump by 6.6 percent next year before becoming even more robust beginning in 2011.
“Underlying the forecast is the assumption that the extreme financial and economic stress that began over a year ago will improve with the beginning of the new calendar year,” Baker said.
Friday’s revenue estimating conference, which will become the fodder from which Gov. Charlie Crist’s budget recommendation will be based, came after an uncharacteristically discordant meeting. Often more closely aligned, economists differed on the pace and degree of recovery as Florida works its way out of the worst national economic downturn since the 1930s.
Economists agreed that the federal “Cash for Clunkers” program accounted for more than $35 million in sales tax collections. They differed widely over whether the state would see a significant falloff as the program comes to an end.
“What the program also did was it brought a lot of people into the showrooms who did not buy and created some demand that was not met immediately but will be somewhere down the road,” said Christian Weiss, an economist with the Department of Revenue.
Baker was more pessimistic, saying tight credit and high unemployment will continue to hamper automobile sales, a major driver in overall sales tax revenue. The robust sales spurred by the federal program will translate into softer sales over the next few quarters.
Overall, sales tax revenue grew by $229 million for the current fiscal year and $228 million for the fiscal year beginning July 1.
Also housing sales were buoyed federal stimulus dollars, a trend that may not continue as robustly despite the decision to extend the program until June 2010.
“I think the people who were going to take advantage of it have already taken advantage of it,” said Tim Campbell, EDR analyst.
Legislative leaders took Friday’s news cautiously, saying they base their budget proposals on estimates made early next year.
“For now, our approach to state spending remains cautious and prudent,” said House Speaker Larry Cretul. “The facts have not changed that Florida still faces significant economic challenges in the years ahead."