TALLAHASSEE, Fla. (AP) — Three renowned economists agree Florida’s boom days are over and that the state’s recovery from the recession is likely to take awhile.
Economist Kevin Hassett of the American Enterprise Institute said Thursday that Florida is one of the states facing difficulty going forward following a 20-month national recession that wreaked “an astonishing period of economic misery.”
Hassett told lawmakers that even if the recession was declared over in August, the risk of calamity remains.
“Gloomy,” state Sen. Evelyn Lynn, R-Ormond Beach, said afterward. “What to do?”
The Florida Legislature convenes its annual 60-day session on March 2 confronted with a $3 billion budget hole. Unlike Congress, the state lawmakers by law must pass a balanced budget.
“The federal government, fortunately or unfortunately, they can just print money,” former Gov. Reubin Askew told lawmakers and the economists as he welcomed them to the Capitol. “There are no easy answers.”
Former Gov. Buddy MacKay was in the audience, but did not participate in the discussion.
Senate President Jeff Atwater, a North Palm Beach Republican who wants to be the state’s next chief financial officer, said the hard times are a good opportunity for lawmakers.
“Now, the people are ready to listen,” Atwater said. “We want to prepare ourselves coming out of this recession with a government structured for growth.”
Florida can no longer count on a steady influx of thousands of new residents moving into the state each year to pay its bills.
Greg Ip, the U.S. economics editor for the Economist Magazine, said tight credit will further hamper Florida’s recovery due largely to the credit-intensive home construction business hard hit by the recession.
University of Florida economist David Denslow said a big part of the Florida economy over the next 20 years will be providing services for some 3.5 million “baby boomers” retired in the state.
“There’s just not going to be a massive rebound,” said Denslow, noting Florida’s economy will remain sluggish from the hangover in a housing market where nearly a third of homes are worth less than the amount of the mortgage.
When the lawmakers were asked if state workers would get a pay raise this year they responded in unison, “no” although Lynn said they hadn’t voted on that yet.
Sen. JD Alexander, R-Lake Wales, said Wednesday that the state will be unable to contribute as much to employee retirement and health plans next year even if it can avoid layoffs.