Florida's real estate market is crumbling so badly that the taxable property value for schools statewide will tumble 9.5 percent next year, state economists forecast Wednesday.
The plummeting property values pose problems for lawmakers, taxpayers and the school system: If the Legislature keeps the schools tax rate the same during the spring lawmaking session, schools could lose tens of millions of dollars statewide. But if lawmakers raise the tax rate, they fear a backlash in an election year.
"I'm not interested in raising taxes on people who can't afford to pay their mortgages," said Fort Lauderdale Rep. Ellyn Bogdanoff, the chairwoman of the House's Finance and Tax Council. "People are struggling enough as it is."
The total taxable values for schools next year is now expected to stand at $1.47 trillion. That's about 3 percent lower than the economists had forecast in July. Overall, the values are 9.5 percent lower than the estimates used to calculate the current budget.
This year's values were nearly 10.8 percent lower than the previous year.
The Legislature's chief economist, Amy Baker, said the new forecast reflects a growing trend of foreclosures, which are depressing property values in a state with 11.2 percent unemployment.
Baker said economists are now seeing home foreclosures due to job losses, rather than adjustable-rate mortgages.
"More people can't find work and can't make their payments," she said.
Even before Wednesday's estimate was released, lawmakers were bracing for a $515 million deficit in K-12 school money. The deficit is likely to grow now, with property values falling more than expected, though the exact amount won't become clear until state officials run the new numbers through the state's complicated school financing formula.
The schools system isn't the only part of the mammoth $66.5 billion budget that's springing leaks. As economic conditions worsen for Floridians, so many more people are enrolling in Medicaid that it's forecast to have a combined $2.1 billion deficit this year and next.
Next year's budget shortfall, which could near $3 billion, would be far bigger were it not for federal stimulus money. Rep. Marty Kiar, a Parkland Democrat who sits on the House's education budget council, said he expects Republican legislative leaders will again use stimulus money — despite publicly bashing it.
"I'm giving them the benefit of the doubt," said Kiar. "Republicans did the right thing last year and took the money and softened the terrible blows to our education system."
The state economists, who meet periodically to examine Florida's tax collections, plan to reconvene Friday to assess revenues for the state's general fund, which accounts for critical state services such as education, health and criminal justice.
Thanks to $2.2 billion in new taxes and fees Gov. Charlie Crist and the Legislature approved this year, the general fund should see an increase in cash next year. Also, the economists are expected to forecast a slight windfall in higher than-expected tax receipts.
Marc Caputo can be reached at mcaputo@MiamiHerald.com.