Hurricanes could end up flooding state's coffers, too
Recovery from the storms could lead to an additional $3-billion in tax collections.
By JONI JAMES
Published November 13, 2004
TALLAHASSEE - Even hurricanes can't wipe out an economic recovery in Florida.
Less than two months after the last of four hurricanes swept through, government economists predict the state will collect $3-billion more than anticipated in tax money over the next two years.
The hurricanes will help, according to economists who refined the state's income projections Friday. They predicted hurricane rebuilding efforts will create $20-billion in activity in the next two years, accounting for about $752-million of the $3-billion more in increased tax collections.
Booming housing sales, mortgage refinancings and business investment also account for much of the additional tax money.
"Every element of the market that could be moving in Florida is moving," said Amy Baker, coordinator for the Legislature's Office of Economic and Demographic Research. "For the past few years consumers have been carrying the sales tax (collections) and now we see business weighing in. That's a sign we're in a healthy place."
Roughly $1.6-billion of the additional revenue will be available this fiscal year, which ends June 30. About $1.4-billion would be available for spending in 2005-06.
What the additional tax money could mean for Floridians is unclear.
Gov. Jeb Bush and legislative leaders were reserved Friday, making no promises about how the new money might be spent in areas such as hurricane relief, education or health care.
Bush predicted no amount of money will satisfy all of the Legislature's desires: "For every extra dollar that comes into the coffers, there will be $5 worth of wishes."
Some of the new money is expected to cover a $164-million deficit in the state's Medicaid budget this year.
Lawmakers also are likely to use the money to pay Florida's 10 percent share of disaster-relief costs as required by the Federal Emergency Management Administration. That bill now stands at $177-million.
Bush, incoming House Speaker Allan Bense of Panama City and incoming Senate President Tom Lee of Brandon would not comment Friday on how they would recommend spending the remaining $1.25-billion this year.
They previously have expressed interest in providing property tax relief for homeowners whose property was severely damaged during the hurricanes. They also have shown interest in helping homeowners who face more than one hurricane insurance deductible because they were hit by more than one hurricane. That could cost as much as $300-million.
But Lee has cautioned such programs would need to consider all potential consequences to ensure insurance companies that have waived the second deductible are not penalized.
"While it is tempting to begin looking for ways to use this increased revenue, we must proceed responsibly," Lee and Bense said in a joint statement.
Bush, usually bullish on Florida's economic prospects, has been cautious in recent weeks. He has said he is not convinced the state will avoid long-term economic difficulties that could be triggered by the hurricane damage.
Bush expressed concern Friday about the impact of Florida's higher deductibles on homeowner's insurance for hurricane coverage, implemented after Hurricane Andrew devastated Miami-Dade in 1992. He worried that could hinder economic recovery for individual families and the state. Florida families are expected to pay $1.2-billion in deductibles.
"I don't worry so much about the state budget as I worry about people's individual budgets," Bush said.
But state economists were far more optimistic about the state's broader economic picture Friday. They acknowledged they were in uncharted territory: No other state been hit by four hurricanes in one season in more than a century.
Home sales and refinancings did slow in some communities in August and September as the four hurricanes hit the state in six weeks. So did automobile sales.
But the state's overall increase in economic activity overshadowed all of that. Businesses were spending more than in recent years, population growth at 2.6-percent was a half-percent higher than expected, and low interest rates continued to encourage homebuying and construction.
Insurance companies are expected to pay out about $19-billion for repairs to private property damaged by the four hurricanes. Analysts said construction spending because of the storms could be at least 10 percent higher than normal. Much, but not all, of that activity is taxable.
The increased revenue estimates mean the state has nearly $23.6-billion to spend on operations this fiscal year that ends June 30. That's 6.8-percent more than in 2003-04.
In 2005-06, it will mean $24.5-billion to spend, a 3.2-percent annual increase.
"It's very good news for the state," Baker said.
Times staff writer Alisa Ulferts contributed to this report.