TALLAHASSEE, FL (AP) A booming housing market and the rebuilding needed from four hurricanes are expected to boost state tax dollars by $1.6 billion more this year than first thought, state economists said.
The stronger-than-anticipated recovery and the rebuilding-induced spending is expected to continue into next year, boosting tax collections by an additional $1.4 billion into 2006, according to the revised state tax revenue estimate.
Even without the spate of four hurricanes that hit Florida this summer, analysts already would have increased their forecast –– largely because the taxes collected when people buy or refinance a house are coming into state coffers in record amounts. And the estimate of next year’s revenue would have also grown fairly dramatically, largely because of additional business investment expected as the economy continues to recover.
But the hurricanes added even more –– $750 million over the two year period –– to the official estimate, mainly because of the expectation of increased sales taxes fueled by spending on the recovery. There’s also a secondary effect of people who have plenty of work, and therefore extra money, spending more on consumer goods.
The new figures raise the estimate for incoming general revenue to $23.6 billion for 2004-05 and $24.5 billion for 2005-06.
While the continuing housing boom and vigorous sales tax collections were driving the strong economic news, taxes on several other types of spending are expected to bring in more than economists thought when they made their last forecast in March.
“Almost every single revenue source ... increased over the prior estimate,” said Amy Baker, the chief analyst for the Legislature’s joint Office of Economic and Demographic Research.
She said it’s not entirely clear why housing starts are stronger in Florida than elsewhere –– but she said the numbers clearly show Florida is leading the economic recovery.
“We’ve never seen collections like we’re getting,” Baker said. “It’s real strong growth any way you look at it.”
Analysts cautioned, however, that the forecast of how much revenue will grow because of hurricane recovery might need further adjustment. They know how much insured losses are expected to be, but have no experience projecting the effect of so many hurricanes so close together.
Hurricane Charley hit southwest Florida Aug. 13. It was followed by Hurricanes Frances, Ivan and Jeanne before the end of September.
Insurance companies are expected to pay out about $20 billion for repairs to private property damaged by the four storms. Analysts said construction spending because of the storms could be at least 10 percent higher than normal. While not all that activity is taxable, much of it is, and will greatly boost the amount of money coming into the state treasury.
Some of the extra money will likely be quickly spent in a special legislative session next month. Among the items for which lawmakers may tap into the money are help for people who had to pay multiple deductibles on damaged homes, a property tax rebate for people whose homes were left uninhabitable by the hurricanes and money for industries hard hit by the storms.
The new estimates mean that the Legislature will have more money to appropriate next year . Gov. Jeb Bush predicted that lawmakers will have plenty of ideas of how to spend it. For every $1 in new money, “there will be $5 worth of wishes,” he said.
Legislative leaders said in a joint statement that they will move with caution, but gave no hint about how they wanted to spend the unexpected money.
“It is encouraging to hear that state revenue estimates indicate Florida’s economy not only has remained strong but is continuing to grow,” incoming House Speaker Allan Bense, R-Panama City, and incoming Senate President Tom Lee, R-Brandon, said in the statement. “While it is tempting to begin looking for ways to use this increased revenue, we must proceed responsibly.”
Interest groups that hope to get some of the money generally praised the news –– but at least one said it still won’t satisfy every need.
“It’s a relief to get some of those dollars, but I don’t want anybody to think it’s enough to do everything that’s going to have to be done over the next couple years,” said Wayne Blanton, executive director of the Florida Association of School Boards.