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Real estate chill cuts into state tax income

Early edition

By JENNIFER LIBERTO
Published November 14, 2006

TALLAHASSEE — Florida’s slowing real estate market means fewer than expected tax dollars will flow to Tallahassee next year, making it harder for Governor-elect Charlie Crist and other state leaders to fulfill campaign promises.

Lawmakers will have an estimated $2.3-billion in additional revenue to work with in 2007-08; roughly $466-million less than economists had thought would be available.

The change constitutes a fraction of the state’s overall budget, which totaled $73.9-billion this year.

The chief culprit is the nationwide real estate slump that has hit Florida even harder because of skyrocketing property insurance rates. That slowdown will put a dent in the taxes from called documentary stamps, on all real estate transactions.

State economists predicted Tuesday that Florida would collect just $920-million in documentary stamps in 2007-08, down from $1.24-billion in 2005-06. Nonetheless, the projection is still more optimistic than the $660.1-million in documentary stamp collections projected for the current year.

“We’ve been talking about this for several (meetings)  now,” said Amy Baker, the chief analyst for the Legislature’s joint Office of Economic and Demographic Research. “It’s just more intense than we anticipated.”

Crist, who must quickly write a budget proposal when he takes office in January, campaigned heavily on populist issues like raising teacher salaries and increasing prison sentences, both of which would require new spending.

His “antimurder” bill, which would require more prison beds, would cost another $118-million a year, by 2010, according to one legislative analysis.

Crist has contended that steady growth in tax receipts, fed in part by population growth, could help him deliver his promises. But state economists warned Tuesday that Florida’s recent flush days, fueled in part by Florida’s second-home market, are gone.

Crist wasn’t deterred Tuesday by the new projections. He said he’ll need just $700-million for his new priorities, less than the $2.3-billion in additional revenue state economists still expect.

But the governor-elect also has to compete with other pressures: growing costs for current state services, voter mandates in the constitution and the priorities of other state leaders.

For example, lawmakers want to throw millions more at the state’s new hurricane mitigation program that provides grants to homeowners who harden their homes. That program received $250-million this year.

Lawmakers must fund a 2002 voter mandate to shrink public school class sizes. And thanks to a voter mandate approved last week, they must spend $57-million on antitobacco education, a program that currently receives almost no state money.

Times staff writer Jennifer Liberto can be reached at jliberto@sptimes.com or (850) 224-7263.

[Last modified November 14, 2006, 21:48:49]