Florida

Maine Governor Moving to Florida for Lower Taxes

Wendell Cox — Thu, 15 Nov 2018 13:34:17 -0500

Maine governor Paul LePage has announced that he will move to Florida after his term expires in 2019. According to The Hill, taxes are driving the Governor away. He said: “I will pay no income tax and the house in Florida’s property taxes are $2,000 less than we were paying in Boothbay,” LePage said. “At my age, why wouldn’t you conserve your resources and spend it on family [rather] than spend it on taxes?”

Florida Rising

Wendell Cox — Sun, 18 Dec 2011 11:06:17 -0500

New Internal Revenue Service migration data, compiled by the Tax Foundation, confirms that more people are again moving to Florida than are moving out. After a loss in the number of 30,000 domestic migrants ("exemptions") in 2008-9 as indicated on tax returns, Florida added 30,000 in 2009-10. This is still a far lower net migration than before the burst of the housing bubble, but is an indication that Florida has returned to growth. Florida's migration turnaround was recently noted in new American Community Survey data (see Domestic Migration: Returning to Normalcy?). Additionally, in 2009-10, Florida ranked third out of the 50 states and DC in personal income gains from net domestic migration relative to 2009. Only Montana (#1) and South Carolina (#2) did better.

Exaggerating in Orlando: Sunrail

Wendell Cox — Sat, 18 Jun 2011 12:37:03 -0400

For decades taxpayers have paid billions to finance major transportation project cost overruns far exceeding the routinely low-ball forecasts available at approval time. This has been documented in a wide body of academic literature, the most important of which was conducted by Bent Flyvbjerg of Oxford University, Nils Bruzelius University of Stockholm and Werner Rothengatter of the University of Karlsruhe in Germany (Megaprojects and Risk: An Anatomy of Ambition).

Major project advocacy, however, has descended to a new low of unprecedented and absurd exaggeration. This is evident in the current public policy debate about the Sunrail commuter rail project in Orlando. Two examples make the point

Exaggeration #1: Job Creation: The Central Florida Partnership claims that Sunrail will create 10,000 jobs. "almost immediately." This would be quite an accomplishment. The Sunrail project is currently projected to cost approximately $850 million for just the first segment. Every cent of the likely cost overruns will be on a blank check drawn the account of Florida taxpayers.

At Sunrail's claimed rate of job creation, the Obama Administration's $800 million "shovel ready" stimulus program (enacted in 2009), would have "almost immediately" produced more than nine million jobs. By now, the unemployment rate would have been reduced to little above 2 percent, lower than at any point in the more than 60 years of available data. Of course, and predictably, the stimulus program did no such thing, not least because a job created by public spending is likely to destroy more than one sustainable job in the private sector.

Exaggeration #2: Sunrail Will Make a Difference: The proponents imply that Sunrail will carry a significant number of trips in the Orlando area, claiming that the line will carry one lane of freeway traffic and that it will give central Florida residents an alternative to high gasoline prices. In fact, even if Sun Rail reaches its ridership projections, it would take a full day of train travel to remove less than an hour's peak hour freeway volume. Needless to say, no one will notice any fewer cars on the freeway (Figure).

Further, Sunrail will not provide an alternative to the overwhelming majority of central Floridians, since it will attract only 1,850 new round-trip riders per day by 2030 (Sunrail's number). Spending $850 million on Sunrail is the same as the taxpayers giving each new rider a gift of $450,000.

The Need to Set Rational Priorities: All of this is occurring in the face of an national fiscal crisis so severe that even the AARP has expressed its willingness to consider cuts to Social Security. As an AARP spokesperson put it "You have to look at all the tradeoffs." Indeed.

Florida Metropolitan Areas Disperse; City of Miami Continues to Densify

Wendell Cox — Sat, 19 Mar 2011 15:48:04 -0400

Miami: The Miami metropolitan area grew 11 percent between 2000 and 2010 according to the recently released census count. The population growth was from 5,008,000 in 2000 to 5,575,000 in 2010. This growth, only modestly above the national average, caused Miami to slip behind Dallas-Fort Worth and Houston, to become the nation’s 7th largest metropolitan area. The Miami metropolitan area was expanded after the 2000 census to include not only the core county of Miami-Dade, but also Broward (Fort Lauderdale) and Palm Beach (West Palm Beach) counties.

The historical core municipality, the city of Miami, grew from 362,000 to 399,000 and accounted for 7 percent of the metropolitan area growth. Miami is unique among the nation’s historic core municipalities in having densified in every census period since 1960, despite not annexing new territory and not having substantial greenfield space for development.

The suburbs captured 93 percent of the growth. Growth was modest in all counties, but was the greatest in the most outlying, Palm Beach, at 17 percent.

Orlando: The Orlando metropolitan area grew nearly 30 percent between 2000 and 2010 according to the recently released census count. Orlando grew from 1,645,000 in 2000 to 2,134,000 in 2010. The historical core municipality, the city of Orlando, grew from 194,000 to 238,000 and accounted for 9 percent of the metropolitan area growth. The suburbs captured 91 percent of the metropolitan area growth, expanding their population by 31 percent. Outlying (Osceola 55 percent) and Lake (41 percent) counties grew the fastest.

Tampa-St. Petersburg: The Tampa-St Petersburg metropolitan area grew 16 percent between 2000 and 2010 according to the recently released census count. The population growth was from 2,396,000 in 2000 to 2,448,000 in 2010. The historical core municipality, the city of Tampa grew from 303,000 to 336,000 and accounted for 8 percent of the metropolitan area growth. The suburbs captured 92 percent of the growth. The fastest growing counties were both outlying, Pasco (35 percent) and Hernando (32 percent).

Jacksonville: The Jacksonville metropolitan area grew nearly 20 percent between 2000 and 2010 according to the recently released census count. Jacksonville grew from 1,123,000 in 2000 to 1,346,000 in 2010. The historical core municipality, the city of Jacksonville, grew from 736,000 to 822,000 and accounted for 39 percent of the metropolitan area growth. The city of Jacksonville is essentially combined with Duval County has a largely suburban form and includes rural areas. The consolidation occurred between the 1960 and 1970 censuses, with the new jurisdiction covering nearly 25 times that of the old (768 square miles as opposed to 32 square miles), while the population of the new jurisdiction was somewhat more than 2.5 times that of the old. Jacksonville covers more than twice the land area than New York City and has approximately one-tenth the population.

The suburbs captured 61 percent of the growth. The fastest growing counties were both outlying, St. John’s (54 percent) and Clay (36 percent), which captured more than one-half of the metropolitan area growth.

USDOT Rail Grants to Obligate Taxpayers

Wendell Cox — Sun, 13 Mar 2011 22:27:18 -0400

The US Department of Transportation has announced a competitive grant program to reallocate funding that was refused by Florida for a proposed high speed rail line from Tampa to Orlando. The line was cancelled by Governor Rick Scott because of the prospect for billions of dollars of unplanned obligations that could have become the responsibility of the state's taxpayers.

Eligibility: Eligible applicants are states, groups of states, Amtrak or other government agencies that authorized to "provide intercity or high-speed rail service on behalf of states or a group of states. The grant program requires recipients of grants (read "taxpayers") to provide financial support to intercity and high speed rail passenger rail programs in the event that cost and ridership projections are optimistic (a routine occurrence).

Obligation to Pay for Cost Overruns: As in the program announced in 2009. the state, group of states, government agency will be required to demonstrate its financial capacity (that is, the capacity of their taxpayers) to pay for cost overruns (page 9). This open-ended liability led Governor Chris Christie of New Jersey to cancel a new transit-Hudson River rail tunnel, which had costs that were escalating out of control that would be the obligation of the state's taxpayers. Governor Christie and Governor Scott were both aware of the disastrous record of major infrastructure cost overruns, such as in the Boston Big Dig project, the Korean high-speed rail program and the overwhelming majority of passenger rail projects in North America and Europe, according to a team led by Oxford University Professor Bent Flyvbjerg.

Obligation to Pay Operating Costs: Moreover, inaccurate passenger and revenue forecasts have been pervasive in high-speed rail systems, as has been documented by Flybjerg, who found that cost overruns occurred in nine out of ten projects:

... we conclude that the traffic estimates used in decision making for rail infrastructure development are highly, systematically and significantly misleading.

This is illustrated by the fact that even a decade and one-half after the Eurostar London to Paris and London service was opened, ridership remains 60 percent below projection. Ridership on the Taiwan and Korea high speed rail systems has been one-half or more below projections. Our analysis of the Tampa to Orlando line revealed exceedingly high ridership projections, which were inexplicably raised even higher in a new report just released. Failure to achieve ridership projections increases the likelihood that a line will need operating subsidies, which would be the ultimate responsibility of taxpayers under the USDOT program.

Federal Grant Repayment Obligation: Moreover, taxpayers of any grant recipient would be required to repay part or all of the federal grant if a sufficient level of service is not maintained for a period of 20 years (page 41). The operation of this provision is illustrated by recent Florida experience. Tri-Rail, the Miami area's commuter rail service only narrowly escaped having to repay $250 million when its service level was deemed to not meet requirements of a federal grant by early in the Obama presidency. Tri-Rail was rescued by a state subsidy of nearly $15 million annually, which restored an artificially high level of service.

Intercity and High Speed Rail Program: The federal intercity and high-speed rail program is largely limited to upgrades of Amtrak-type service. Before Governor Scott's decision, only two of the programs (Florida and California) would have achieved international standard high speed rail speeds.

Tampa to Orlando High Speed Rail: The Risk to Local Taxpayers

Wendell Cox — Fri, 18 Feb 2011 09:32:42 -0500

No sooner had Florida Gov. Rick Scott rejected federal funding for the Tampa to Orlando high-speed rail line, than proponents both in Washington and Tallahassee set about to find ways to circumvent his decision. While an approach has not been finalized, a frequently suggested alternative is to grant the federal money to a local government, such as a city or county or even to a transit agency.

Eliminating State Taxpayer Risks, Creating Local? In an announcing his decision, Governor Scott cited the substantial risks to Florida taxpayers from cost overruns, the ongoing obligation under the federal grant to subsidize operations and the fact that under certain circumstances Florida might even have to repay the $2.4 billion in federal grants. Any local government accepting the federal money would expose itself to the financial risks from which Florida taxpayers have been exempted by Governor Scott's action.

None of these risks is an idle threat.

(1) Capital Cost Overruns: Based upon the international experience, the eventual construction cost overruns for the Tampa to Orlando high-speed rail line could easily run to $3 billion, more than doubling the price of the project (Note on Extent of Taxpayer Liability, below). In light of the recently reported 50 percent increase in California high-speed rail construction costs, even the $3 billion estimate could turn out to be conservative. The problem is that any local federal grant recipient (city, county or transit district) would be responsible for these cost overruns.

(2) Ongoing Operating Subsidies: The ridership projections for the Tampa to Orlando high-speed rail line are exceedingly optimistic. This could well lead to a situation in which substantial subsidies are necessary to operate the trains, despite claims of proponents to the contrary. These subsidies would be the responsibility of any city, county or transit district that becomes a grant recipient.

(3) Federal Pay-Back: If, for any reason, the eventual high-speed rail service levels are not sufficiently high because of lower than projected ridership or if service is canceled, any city, county or transit district could be required to return the $2.4 billion in federal grants. Florida is already paying millions annually for a similar "transgression." In 2009, service reductions on the Tri-Rail Commuter Rail System in the Miami area led the Obama Administration's Department of Transportation to demand repayment of one quarter billion dollars in grants. Tri-Rail was saved from this obligation only by a multimillion dollar Tallahassee bailout. Proponents have claimed that this rail obligation could be negotiated away for high-speed rail. Why was the Tri-Rail obligation not negotiated away in 2009?

By rejecting the federal funding, Gov. Scott has inoculated Florida taxpayers against these risks.

However, there would be no inoculation for any local jurisdiction whose commissioners or city council accepted the expensive "gift" of federal funding for the high speed rail line. Their taxpayers would have to pay. The very financial viability of any such jurisdiction could be at risk.

The Risk Could Revert to State Taxpayers: Eventually, the risk could be again be visited upon state taxpayers as a local government facing virtual bankruptcy would doubtless seek a bailout in Tallahassee, repeating the Tri-Rail experience, though much more expensively. Moreover, canceling a half built project, which might be tempting as costs escalate above projections, would simply not be viable. The political pressure to complete the project, at whatever cost, could prove to be overwhelming.

Delusions About Private Responsibility for Cost Overruns: Some proponents claim that these huge obligations can be somehow transferred to the private builder/operator that is selected for the project. Nothing like this has ever happened in public-private partnerships around the world, and for good reason. Companies do not stash away billions of dollars for cost overruns.

Further, the winning bidder will be a consortium of other companies, established with limited liability by larger companies. The consortium would abandon a project it could not afford sooner rather than later. Any bankruptcy of the builder/operator would be limited to the consortium and would not extend to the parent companies, leaving the local taxpayers to pay.

There is no escaping the fact that the taxpayers of any city or county accepting the federal money would be providing financial guarantees to an international infrastructure industry that has left a "train" of huge and unanticipated financial obligations around the world in its wake (Note on Cost Escalation, below).

Believing in Santa Claus? Public officials, and most recently Orlando Mayor Teresa Jacobs, have indicated support for high-speed rail if private and federal funds pay for it, and state and local taxpayers aren't exposed to liability. This is a wise position, but untenable. Expect Santa Claus to arrive in the midst of a Florida summer before that, with a sleigh full of billions.

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Note on Extent of Taxpayer Liability: This $3 billion is in addition to the already committed $280 million of taxpayer funding. Proponents of the high-speed rail line have assumed that the $280 million would be the limit of taxpayer obligations. As this article shows, the $280 million could be a "drop in the bucket" compared to the likely eventual taxpayer liability.

Note on Cost Escalation: An international team of researchers led by Oxford University Professor Bent Flyvbjerg has found in Megaprojects and Risks: An Anatomy of Ambitionthat similar projects routinely cost far more than taxpayers and other funders are told. They also attract fewer riders and generate less revenue (which can require operating subsidies). The Flyvbjerg team implies that these "lowball" (our term) projections are not accidental but all are the result of "strategic misrepresentation," (their term) which project promoters employ to increase the potential that projects will be approved. The researchers also refer to "strategic misrepresentation" as "lying," which is an exceedingly strong term for academic research and is reflective of the strength of the conclusions.

Obama Throws Life-Line to Smart Growth Areas

Wendell Cox — Fri, 19 Feb 2010 23:02:35 -0500

President Obama has announced a special program of assistance for home owners in the five states that have been hit hardest by the housing crisis. The proposed program is targeted at California, Florida, Arizona, Nevada and Michigan, where house price declines are more than 20% from the peak of the bubble.

The greatest losses occurred in California, Florida, Arizona and Nevada (see note), where peak to trough house price loses exceeded 40% in all 12 metropolitan areas over 1,000,000 population except Jacksonville. These markets accounted for 70% of the gross housing value loss in the nation before the Lehman Brothers collapse. House prices were driven to unprecedented levels of up to four times historic norms by overly prescriptive land use regulations (“growth management” or “smart growth”) that makes land unaffordable.

Average losses were more than $175,000 in the markets of these states, more than 10 times those in traditionally regulated markets such as Atlanta, Dallas-Fort Worth, Houston, Indianapolis, Kansas City and Cincinnati. These intense losses were beyond the ability of the mortgage industry to sustain and it is generally acknowledged that this precipitated the Great Recession.

Smart growth had nothing to do with the Michigan price collapse. There, the strong economic downturn pushed prices down even as the state escaped without a housing bubble.

The President’s program means that the nation is now paying twice for smart growth policies. The first payment was, of course larger, which cascaded into the huge household wealth losses in the Great Recession.

Note: While Las Vegas and Phoenix are sometimes perceived as not having prescriptive land use policies, the Brookings Institution ranks both metropolitan areas as toward the more restrictive end of the regulatory spectrum. These overly prescriptive regulatory environments are exacerbated by the fact that in both metropolitan areas much of the developable suburban land is owned by government, and is being auctioned, though at a rate less than demand. These factors combined to drive auction prices per acre up nearly 500% in Phoenix and nearly 400% in Las Vegas during the housing bubble.

Report: Florida Losing Population

Wendell Cox — Thu, 13 Aug 2009 23:50:16 -0400

This should be filed with other improbable stories under the subject “beach running out of sand.” The St. Petersburg Times reports that Florida has lost population for the first time since 1946. University of Florida demographers are due to release a report that the state lost 50,000 residents in the year ended April of 2009. This is in stark contrast with the state’s addition of more than 300,000 residents in every year of the decade through 2006

The article cites housing price increases as driving out families with children and the resulting housing contraction with driving out construction workers. Florida’s housing bubble related price increases were perhaps the highest in the nation, following California.

There had already been ominous signs, with the United States Bureau of the Census reporting net outward domestic migration in 2008. As late as 2005, there had been a net gain in domestic migration of 267,000.

Flushing in Florida?

Mark Schill — Thu, 17 Jul 2008 12:44:52 -0400

It's all gloom and doom in the Miami Herald today after recent job numbers indicate the state is last in the nation in job creation.

The top job-loss state in the nation. Shrinking wages. Collapsing population growth. Record home foreclosures.

Florida's economy is not just firmly and bleakly in the red ---- it will likely stay that way until next June, according to the state government's top economists who issued their most pessimistic financial forecast in years.

With few exceptions, the economists' Wednesday forecast shows that most economic indicators will do worse in this budget year when compared to a forecast they issued in February.

A good sign that the recent growth in Florida was built on a house of cards, this is right in line with the findings of our Best Cities analysis.

Link via Steve Bartin.