Florida’s tax receipts are falling for the first time since 1975 as a slump in construction and home sales dims the economy of the Sunshine State.
“We’ve been on a pretty steep incline,” said Florida State Senate Majority Leader Daniel Webster, a Republican from Winter Garden. “There was always going to be an end to that, and it’s flattened out.”
States from New Jersey to California are getting pinched, just a year after many enacted the biggest spending increases in almost two decades. They’re drawing down $16.6 billion from reserves this year — 29 percent of their total savings — even as legislators debate tax cuts and plans to expand programs such as government-subsidized health insurance.
“A lot of states are starting to worry,” said Iris Lav, who follows state budgets for the Center on Budget and Policy Priorities, a nonprofit Washington group that monitors state finances. “We have yet to see the effects of the bursting of the property bubble.”
The slowdown in tax collections comes after five years of expansion, surging demand for new homes and soaring real estate prices produced windfalls that gave many states surpluses. California and New York won improved credit ratings and the borrowing climate remains favorable — for now.
In New York, Spitzer has battled lawmakers to limit increases that he says would lead to an $8 billion mismatch between spending and revenue next year.
New Jersey, the most densely populated state and the one with the highest average property taxes, is facing a $2.5 billion budget shortfall next year, putting the strain on state agencies as Governor Jon Corzine pursues a cut to property taxes that soared along with home prices.
“We remain one of only six states with a structural deficit after four and a half years of national economic expansion,” Corzine said this month.