Nothing emerged during a numbers-crunching exercise by state economists Tuesday to change the economic picture the Legislature will confront this year — growth in tourism and slack housing starts will offset each other as overall growth produces about $31 billion in general revenues.
“Those are going to compensate for each other. So, overall, you end up about where you were, on the same path where we were heading,” said Amy Baker, coordinator for the state Office of Economic and Demographic Research.
Together with unspent money left over from the current fiscal year, legislators will have about $32.3 billion in general revenues to spend during the fiscal year that begins July 1. That doesn’t count taxes and fees that feed trust funds dedicated to specific programs.
“Florida has been moving in lock step in line with our forecasts for several years now. We have not really had any big surprises. I think that will continue to be the case,” Baker said.
“It’s positive, from the fact that we continue to see some strength. But it’s not going to change what they’re facing this year.”
Gov. Rick Scott has proposed an $83.5 billion state budget for next fiscal year, but House approproprations subcommittees are taking a more pessimistic view of state revenues and are looking for programs to trim.
Economists from Baker’s office, the Legislature and the governor’s office reviewed data suggesting growth of about 4.5 percent in the tourism sector, notwithstanding declines in overseas visitors, including Canadians. Yet a long-anticipated growth in housing starts has yet to materialize.
Multifamily housing starts ought to be growing faster than they are, Baker said — particularly given young people’s penchant to cluster in rental apartments in cities. The economists suspected a lag time to put together construction deals. Or perhaps builders were awaiting the results of the presidential election.
Overall, construction “is growing with population growth, because our population is growing. But the amount it grows per new person is pretty steady,” Baker said.
“Even with the ginormous growth rate we’ve had — we’ve had double-digit growth rates for three of the last your years — we’re still nowhere back to normal.”
The prospect is for weak private housing starts through next fiscal year. “But then we have really good growth rates next year. So you’re coming back to where we were” before the recession “and going slightly ahead” in years to come.
Zika virus has not seriously crimped tourism, but Baker hadn’t expected that it would yet. The economists last considered the Zika factor last fall — going into the winter, when mosquito activity declines.
“The question is, as we go back into a higher period of time for mosquito activity, will we start off with no Zika effect or will we get back pretty fast to where we were, with an increase,” she said.
“Beause we think of it as a black swan” — a big surprise — “we’re not building a Zika problem into our forecast. But that would be a threat, because it’s such a strong part of our forecast.”