AIF's Economic Stimulus Package

Florida is blessed with an abundance of natural and human resources, which have flowered into what was one of the most vibrant and resilient economies in the nation.

An infestation of weeds, in the form of rising property taxes and skyrocketing commercial and home insurance rates, is threatening to choke the continued prosperity of Florida.

AIF has put together an economic stimulus package designed to nourish Florida’s economy, allowing it to flourish and grow
for the enrichment of all the people who live and work here.

The package combines government spending in key areas with the enactment of incentives to attract new business and
spur more job creation in home-grown corporations. Provisions to attract venture capital, foreign investors, and overseas tourists will provide a much-needed infusion of private investment.

There are those who will balk at increased government spending at a time when state forecasters are estimating a revenue
shortfall of up to $2.5 billion. The spending provisions of AIF’s economic stimulus package were chosen because they promise
a high return of investment. Ramping up spending on road construction will bring $7 in economic activity for every dollar spent by the state. Devoting money to our state’s infrastructure will also return Florida to a positive growth rate, which historically has been one of the drivers of our economy.

Growing Prosperity

Starting the last century as one of the least populated states in the nation, Florida blossomed into a fast-growing powerhouse, reaching its current status as fourth largest state by the beginning of this century.

That positive trend has come to a screeching halt, and Florida’s engine may now be throwing itself into reverse. In 2006, Florida grew at the slowest pace since 1 997, and 2007 brought an even lower rate of increase, as 37 percent fewer people moved to Florida.

According to the 2008 economic outlook for Florida’s economy, published by Florida TaxWatch, Florida stands a 40-percent chance of falling into a recession. According to the report, “Even if a recession is avoided, growth in Florida will likely lag behind the rest of the nation in 2008.”

While TaxWatch found that Florida was not currently in recession, every one of the state’s economic indicators showed “a seemingly unyielding downtrend.” New housing starts for 2007 were at their lowest level since the 1 991- 1992 recession, and had lost 58 percent of their value since the 2005 peak.

Statewide taxable sales showed decreases for 11 consecutive months, beginning in November 2006. Florida TaxWatch also noted that employment growth is close to zero while the unemployment rate increased from 3.2 to 4.2.

Waiting and hoping for a turnaround is not an option for Florida. Political leaders must pledge to support policies, such as those contained in AIF’s economic stimulus package, that will help put Floridians to work, spur investment in new products and services, and create the conditions for Florida’s economy to bloom anew.

AIF’s Economic Stimulus Package

AIF’s economic stimulus package does not form an exhaustive to-do list. Rather, it outlines the most important components of a program to stimulate the private sector by the strategic use of public dollars.

These one-time capital infrastructure improvements will place Florida in the most favorable position when the economy turns around. By investing in Florida’s future now, we can ensure that we will be ready to sustain our economy for now and the foreseeable future.

Improve Infrastructure

Promote Road Development: Miles traveled by vehicles on Florida roads increases by about three percent a year while capacity increases by only 1 .1 percent. This backlog of road construction is unsustainable and poses a long-term threat to Florida’s prosperity. To alleviate this problem, AIF is recommending the following:

• implement the Senate’s “Ready-to-Go” road-building list proposed by Sen. Dan Webster (R-Winter Garden) last
  session; money would be spent on projects that have already been approved and the public is expecting to see complete
• disburse D OT Trust Fund dollars on roads now so that funds set aside for transportation will be used appropriately, rather than being used to balance the state budget

Provide Affordable Housing: If people can’t afford to live in Florida, they won’t work in Florida. A lack of affordable housing is a desperate problem that affects our state’s workforce and our seniors. The Sadowski Act was created to help
meet the need for affordable housing, but the act’s programs have been under-funded in recent years. AIF is asking lawmakers to reverse that trend by taking the following actions:

• expend funds from the Sadowski Affordable Housing Trust Fund to place families in homes that are in close proximity to their job sites
• increase funding for closing costs and downpayment assistance for first-time homebuyers

For every $1 million of state funding for affordable housing, $10.36 million of economic activity is generated. As the market rebounds, families will move from modest first homes to larger homes as their income and family needs expand. This will facilitate the natural cycle of sustainable growth and development. The bottom line is that affordable housing dollars leverage private and federal dollars and put the construction industry back to work.

Encourage School Investments: While business leaders support Gov. Crist’s desire to invest more money education, they also recognize the growing strain put on the state’s budget by the class-size reduction amendment. While school construction can act as an economic stimulus, the amendment limits the state’s flexibility to address a multitude of educational needs. AIF
recommends that lawmakers take the following actions to improve the state’s education infrastructure:

• revisiting the implementation of the class-size reduction amendment so that measurement of goals can be made on a district or school-wide basis rather than on individual classrooms
• ensure money is spent where it is most needed, whether that means building schools, improving classroom resources,
  rewarding excellent teachers, etc.

Create Alternative Water Supply Solutions: As Florida’s population continues to grow, experts estimate we will need 26 percent more gallons of water per day by 2022. In addition, Florida is currently experiencing extreme drought conditions and as a result, adequate water reserves are diminishing daily. Business leaders advise the state to expend funds from the Water Protection and Sustainability Trust Fund (WPSTF) by reassigning the full appropriation per year towards developing alternative water supply projects such as reclaimed water projects, desalination efforts, and the collection and storage of rainwater. Furthermore, these capital investments are infrastructure intensive and create jobs for construction workers, engineers, and many others throughout the state.

Give Ports a Competitive Edge: Each year, Florida appropriates approximately $10 million to the governmental entities that operate our 14 deep-water ports. This expenditure is only a fraction of the ports’ money-making potential if government would invest in the construction of proper port warehouses and distribution centers.

In many cases, ships arrive at Florida ports with a full cargo but depart empty. These socalled deadhead trips are costly and inefficient, thus making shipping companies consider other ports. Savannah, Georgia has built a huge distribution center at its port and now many large retailers and auto manufacturers are using this facility to export their goods to other countries, creating a huge boon to that state’s economy.

A corollary issue is that Florida’s security requirements are much more stringent than federal requirements, and consequently we are beginning to lose business to other ports in the region because our security costs are significantly higher. Secure ports are, of course, crucial, but we cannot afford to price ourselves out of business without attempting to put ourselves on an equal footing in actual port costs.

Lastly, we suggest that the Legislature address the regulatory barriers for expanding large capacity petroleum-storage centers at our ports to aid with the development of alternative fuels and fuel capacity during natural disasters.

Cultivate Florida’s Technological Future

Since the beginning of the Space Age, Florida has been the leader, the site where all manned space flights originated. We are now in real danger of losing our leadership to Virginia, which is copying our model for Space Florida, and is also developing Wallops Island to compete with Cape Canaveral.

According to NASA, there will be a three to five-year gap between the end of the Space Shuttle and the beginning of the Constellation program. Florida must work quickly and smartly to shorten this time frame by committing the necessary funds to stimulate and encourage commercial space activity. This kind of investment will ensure that the high-quality, highly trained workforce of engineers in Florida stays in Florida.

In addition, we have the unique opportunity to refurbish existing launch pads for private flight. Our competitors, on the other hand, face having to start from scratch, a costly proposition. Aerospace is a $2-billion industry and it contributes to the economies of 47 of Florida’s 67 counties. It is an issue of significant importance to our state’s economy and to our leadership
in space flight.

Increase Support for Research Institutes

Florida is now home to a number of research institutes that are conducting cutting-edge research. Florida must continue its support of these institutions and nurture them so that synergistic growth can occur.

As they grow, other complementary companies that feed off of their work will come to the Sunshine State. These institutes constitute 21st Century economic development, and will be very important to Florida’s future in biotechnology, biomedicine, etc. The high-skilled, high-paid jobs will put Florida on the international map for new technologies.

Florida must continue to fund and perhaps expand the innovation incentive fund, as well as build on the venture capital and university commercialization programs established by last year’s Legislature as a way to encourage investment in bringing to market the products and ideas that grow out of our state’s research institutes.

Invest in International Tourism

The U.S. dollar has become affordable for those living overseas, making travel to U.S. financially attractive. VISIT FLORIDA has asked the Legislature to grant the organization an additional appropriation for use in foreign and domestic tourism development.

Policy makers should support this request as a way to strengthen Florida’s already strong tourism industry. In a time of financial need this relatively small investment could prove to be instrumental in helping to generate economic activity and jobs.

Jacquelyn Horkan is a freelance writer who has covered business and politics for more than 20 years
(e-mail: jqhorkan@comcast.net)