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Hernando County in recession, economist says

BROOKSVILLE — Economist Hank Fishkind was not mincing words with Hernando County commissioners on Tuesday.

Crises in the housing, banking and energy industries, he said, as well as soaring unemployment numbers in Hernando County, translate into one nasty word: recession.

Although the economic downturn is the worst in many years and local governments will feel the crunch in their bottom lines for the next couple of years, the Orlando consultant also had some cautious good news.

Hernando County's severe housing slump may have finally hit bottom, Fishkind said, citing property records. A slow climb back, he said, is about to begin.

The numbers also indicate that property values may also be evening out, with average homes selling in the $140,000 to $150,000 range.

But Fishkind said many factors will make the housing recovery slow but steady. One of those keys is that houses in the Northern states must sell before those retirees can buy homes in Hernando County and other areas of Florida.

The economist warned that government is going to feel a magnified impact of all the financial bad news. For example, as more people lose their jobs, more will seek social services at a time when the government cannot afford increases, he said.

Although some have said government must learn to do more with less, Fishkind said, the reality is that "we're going to have to do less with less.''

Fishkind's visit, financed by the local work force board, was part of the commissioners' efforts to explore steps they can take to jump-start the county's economy as they prepare for upcoming budget hearings.

Commissioner Diane Rowden earlier had criticized Fishkind as being an opponent of impact fees, one-time charges on new construction that are meant to offset the costs to taxpayers of the increased services that growth demands.

Many leaders in the local building community have been pushing for the county to relax the impact fees in order to help energize the dormant home-building industry and to qualify for a one-time special state program to help with affordable housing. Rowden has been concerned that Fishkind was going to press their case before the board.

However, the impact fee discussion is set for Aug. 5. Fishkind's comments on Tuesday focused broadly on the local economy.

Even though money is tight, Fishkind encouraged the board to stick with its capital improvement plan because the county's efforts to make improvements produce jobs. Plus, many construction costs are lower now.

Fishkind also told commissioners they might consider offering developers an alternative to paying a big, up-front impact fee.

Instead, costs of infrastructure required by growth could be paid through a special taxing unit. Those units bring in dollars over time, and the county can float bonds against those funds, allowing them to build the capital infrastructure up front.

Another option, although Fishkind said that it might be a difficult sell in the current environment, would be to push for a 1-cent sales tax dedicated to building infrastructure.

He also supported the efforts of the county to diversify its tax base by encouraging more industry and focusing less on the home building industry. He agreed that public-private partnerships can also work well if the government is willing to be flexible.

"It's the kind of thing that can work,'' he said.

County Administrator David Hamilton wanted clarification. He asked whether the impact on property tax revenues was going to continue to make for tight budgets for the coming year and the year after if the housing slump has likely bottomed out.

For the 2009-10 budget year, there will only be a very small increase in tax revenue, Fishkind replied.

"You won't get the gains from 2010 until 2011,'' he said. "You'll just have to slog along a while with very limited revenue gains.''

Barbara Behrendt can be reached at behrendt@sptimes.com or (352) 848-1434.

Hernando County in recession, economist says 07/22/08 [Last modified: Friday, July 25, 2008 1:44pm]
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