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Latest State Economic Forecast Even Bleaker

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By CATHERINE DOLINSKI, The Tampa Tribune

Published: November 3, 2007

TALLAHASSEE - Home construction in Florida is dropping off even further this fiscal year than state economists projected last summer, signaling that the market - and the state's economy - are going to take longer to bounce back than previously thought.

Single-family home construction hit a 25-year low in Florida in September, economic analysts for the Legislature and Gov. Charlie Crist said Friday during their meeting to update their already gloomy assessment of the state's economy.

In July, the economists had predicted that new home construction would fall by 22 percent in fiscal year 2007-08 from the previous year's levels, but begin to recover in 2008-09. Friday, however, they said home starts would drop off by 44 percent and not rebound substantially until 2009-10.

Meanwhile, the number of Floridians without jobs will grow, they say. After three years of dwindling unemployment rates, the number of unemployed could jump by as much as 29 percent in 2007-08, and again by 7 percent the following year before the trend begins reversing. The predictions for both years are graver than what the analysts forecast last summer.

Slowing employment in construction "is starting to put a drag on the overall employment growth in Florida, much more so than it is in the nation as a whole," said Frank Williams, an economist in the state Office of Economic and Demographic Research who took part in the conference.

Along with increased joblessness will come a drop in car and light truck sales. Florida's population growth will slow more than projected in July.

"These are real significant changes, overall," said Amy Baker, coordinator of Economic and Demographic Research. "We don't have a recovery now until 2009. ... It's going to affect revenue numbers significantly because of the timing difference, but it's not necessarily saying we're going to get worse at this point."

The economists did not make specific predictions about state revenue - that conference will take place Nov. 14 - but lawmakers are bracing for bad news.

Lawmakers trimmed the current state budget by $1.1 billion during a special session in October, responding to state economists' warnings of deficits over three years.

"If the budget estimates come in and demonstrate in the fourth quarter of 2007 that the previous forecasts were high ... we very well may be facing another round of budget-cutting in January for this budget cycle," said Rep. Kevin Ambler, R-Tampa, who sits on the House Policy and Budget Council.

Sen. Jim King, R-Jacksonville, said he, too, has heard the growing speculation about a January budget-cutting session. But he hopes it won't be necessary, he said, given the impending start of the regular session in March.

Either way, said King, who sits on several Senate appropriations committees, the Legislature is going to be forced to make "hellacious cuts" if the predictions hold true and no offsetting alternative revenue source is found.

Sen. Mike Fasano, R-New Port Richey, said lawmakers may need to eliminate some costly sales tax exemptions to bring in more revenue, although "I don't want to affect average citizens, the guy and gal barely able to get along today."

Baker doubted it would be necessary for lawmakers to make more cuts this year, given the heavy trimming last month.

"It's really '08-09 that's the big focus right now."

Crist will base his budget proposal for the coming fiscal year on the Nov. 14 revenue estimates. Repeatedly, Crist and lawmakers have said that the tax-cutting measures they are placing before voters on Jan. 29 will stimulate the economy.

The proposal, if approved by 60 percent of voters, will double the homestead exemption, make Save Our Homes tax protection portable and cap valuation assessments on non-homesteaded properties at 10 percent.

Given the national news about falling home prices and foreclosures, the latest projections for Florida's economy should not be surprising, said Ambler, who wants lawmakers next to consider swapping a penny hike in the sales tax for the schools portion of property taxes.

"These new forecasts make it more apparent that we need to look seriously at stimulus policies."

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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