Stimulus Dollars and Florida's Economy

 

Overview

 

According to White House estimates, the $800+ billion national stimulus program is estimated to boost Florida's Real GDP (based on 2007 RGDP of $609.899 billion) by 2.09 percent or $12.80 billion. A total of $19.5 billion of stimulus money is expected for Florida. So far $8.8B has been expended as of Mar 2010. As of March 2010 Florida was earmarked approximately $15.2 billion of stimulus money. Brevard County was earmarked approximately $270 million of stimulus money or about $509 per capita.

 

The stimulus plan is estimated to either create or save 218,300 jobs in Florida by the fourth quarter of 2010, representing an increase of 2.79 percent from the total nonagricultural employment of 7,805,600 as of November, 2008. Unfortunately, reality is a bit different from these estimates. Florida's seasonally adjusted unemployment rate for March 2010 is 12.3%, which is up 2.7 percentage points from the March 2009 rate of 9.6 percent. Florida's total nonagricultural employment in March 2010 is 7,181,000, representing a loss of 149,600 jobs compared to March 2009.

 

A recent National Association for Business Economics survey of the nation's business economists found that 73 percent "reported the fiscal stimulus enacted in February 2009 has had no impact on employment to date." Overall, economists consider the economy to be starting to improve but say the improvement has nothing to do with the stimulus, rather it is simply part of a normal rebound.

 

 

Florida Budget

 

The Florida budget is about $68 billion for the next fiscal year. The budget relies on $2 billion in federal stimulus money, and may leave lawmakers in an even bigger bind next year, because stimulus money runs out and the federal government cuts back on its Medicaid payments to the states. The budget does not include: new taxes, state worker layoffs, or cuts in Medicaid services (health care program for 2.7 million low-income Floridians).

 

Florida's 120,000-plus state government workers were largely spared. State workers' pay won't be cut, but they also won't see an across-the-board raise for the fifth consecutive year. About 27,000 state employees, including legislators, who got their health care for free, will now pay a nominal premium ($8 a month for an individual plan and $30 a month for a family plan).

 

 

Florida's Employment/Unemployment

 

The 'Florida Back to Work Program' is to get $200M of stimulus money to cover up to 95% of the salary costs for employers from the US Dept of Health and Human Services. The money is intended for low income families and has certain other requirements of employers. The program is short term as it is to terminate on Sept 30, 2010. The idea behind the program is to jumpstart hiring and hopefully business will sustain the employment.

 

Florida legislature has decided not to take some stimulus dollars earmarked for unemployment because that money is tied to changing its unemployment insurance rules. This money kicks in if they were willing to pay benefits to broader groups of people, including part-time workers and those who have had to leave jobs for compelling family reasons. The legislature decided against a bill that would have made the state eligible for as much as $443 million in additional stimulus dollars. Expanding benefits broadly enough to qualify would have ended up costing the state an estimated $100 million every year in additional claims. At the current rate the money Florida would have received would have been exhausted in about six weeks, but would have increased annual costs forever. So, Florida decided to instead borrow the money. It has already borrowed $1.2 billion from the federal government to pay out benefits under existing eligibility rules.

 

In addition to the jobs grants, most Florida retirees, disabled veterans and others each got $250 checks from the Social Security Administration, totaling $925 million. And most taxpayers received a $400 "making work pay" tax credit last year.

 

Florida is participating in a number of additional programs, including the Senior Employment, Workforce Employment and Training, Vocational Rehabilitation Grants, and Recover Arts Jobs. Many of these programs require commitment to additional reforms as defined by these programs.

 

 

Sample of Florida Stimulus Projects

 

A Bridge That Allows Turtles And Other Wildlife To Safely Cross A Highway - The $3.4-million 13-foot tunnel near Tallahassee, Fla. will allow turtles and other wildlife to safely cross U.S. Highway 27. (Peter Nicholas, "Senator' Report Casts Doubt On Stimulus Projects," Los Angeles Times, 6/16/09)

 

FloridaAtlantic University In Boca Raton Used $15,551 In Stimulus Funds - To Pay For Two Summer Researchers To Help Gauge How Alcohol Affects A Mouse's Motor Functions. (Robert Nolin, "Stimulus Cash for Research," Orlando Sentinel, 2/16/10)

 

The University Of Florida Is Spending $325,394 In Stimulus Money To Determine How Environment Affects The Mating Decisions Of Female Bugs - The project proposal should answer the question of 'whether males with large weapons are more or less attractive to females'. (Robert Nolin, "Stimulus Cash for Research," Orlando Sentinel, 2/16/10)

 

Broward County $1,240,000 for Energy Efficiency and Environmental Initiatives - Possibilities include development of a climate change element to the county's comprehensive plan,a countywide urban reforestation program, and a public outreach campaign promoting energy efficiency and transit ridership.

 

 

Thoughts

 

Government cannot create new spending out of thin air. Every dollar spent by the government comes out of the pockets of taxpayers, either immediately in the form of taxes or down the road in the form of borrowing. Rather than bringing about a recovery, this destroys wealth by spending money on public projects that are much less efficient than private sector activities. History tells us that government spending does not create private-sector jobs, though it does increase public-sector employment, which is typically a drag on economic growth. This merely redistributes wealth to the politically connected and the politically favored at the expense of the taxpayer.