Foreclosures still affecting state budget
The tough housing market is expected to continue to be a drag on the state’s tax collections even after the economy begins to pick up in future years, according to forecasters.
There were few changes Tuesday in what state economists believe will happen with property values for the coming fiscal year, which begins July 1.
Forecasters met and moved the expected growth rate for taxable property values up to 0.83 percent. That’s a few ticks up from 0.75 percent — and both are negligible changes that aren’t expected to produce much revenue.
That number will be used to determine how much counties are likely to pay the state in the “required local effort” that is distributed as part of the main formula for public school funding.
Forecasters also anticipate slow growth in property values over the next two or three years, picking up to about 3 percent a year.
The lag is caused by a surge in foreclosure filings that have swamped the courts. Properties in foreclosure now take as much as 2 1/2 years from filing to the market. Many of the foreclosures that happened as the housing crisis was roiling Florida still
aren’t showing up in the numbers.
“The worst years are really ahead of us in terms of hitting the marketplace,” said Amy Baker, coordinator for the Legislature’s Office of Economic and Demographic Research.
She suggested during the meeting foreclosures could still be putting pressure on property tax revenues as late as the 2016-17 budget year. After the meeting, Baker told reporters more homeowners also could use short sales instead of going through foreclosure.
“At some point we think short sales in Florida are going to pick up,” she said. “They haven’t yet.”
Short sales can sometimes drive down the assessed values of homes.
The forecasters also took into account factors that could offset the increase in foreclosures, including new residents moving into the state and the slow recovery.
“Migration is going to be picking up,” said Don Langston, an economist with the House, during the meeting. “The demand side is going to be notably stronger.”