PRESS RELEASE September 28, 2001

TALLAHASSEE - - Lawmakers must perform a tremendous juggling act when they convene for a special session, according to a new Budget Watch report from Florida TaxWatch. While they search for ways to resolve a growing budget deficit, they must also focus on ways to stimulate the economy and produce a sound fiscal outlook for the coming years.

"There are two ways out of this revenue shortfall," said Dominic M. Calabro, President of Florida TaxWatch. "We can grow our way out, or we can cut our way out. While we have to cut in the short term to prudently balance the budget, the long-term solution lies in sound economic growth."

According to the TaxWatch report, bringing tourists back to spend money in Florida must be a top priority for state leaders.

The report outlines Florida's dependence on tourism revenues, and recommends increased spending on promotional campaigns to lure visitors to Florida. According to two econometric models published by Florida TaxWatch and the FSU Center for Economic Forecasting and Analysis, the direct and indirect state tax revenues attributable to travel and tourism in Florida generated between $5.6 billion and $6.9 billion in General Revenues in 1999.

"Tourism is one of the basic foundations of the Florida economy, and the terrorist attacks could have a major impact on the state's fiscal condition," Calabro said. "Both the public and private sectors must strive to keep the economy moving by getting Florida's 16 million residents and tens of millions of visitors back in the business and hospitality of Florida."

The State of Florida currently spends $21.6 million annually on tourism promotion, and there has been little increase in recent years. Florida is using its $2 million tourism emergency fund to begin a promotional campaign that will target both Florida residents and those within driving distance. The TaxWatch report recommends that the Legislature dedicate another $5 - $10 million for strategic tourism promotion.

"While budget cuts must be part of the immediate solution, strategic government spending on tourism promotion and key public infrastructure projects can also help spur the ecomony," Calabro said. "We recommend acceleration of planned public works projects at the state and local level wherever possible to bolster the construction industry and help get the economy back on track."

According to Calabro, tax increases would not be a prudent way to address the immediate shortfall facing the state because they could be counterproductive to stimulating the economy.

However, a one-percent increase in Florida personal income means almost $5 billion more for Floridians to spend. That can translate into significant state revenue.

"The best solution is sustained economic growth combined with sound budget cuts and wise use of healthy reserves," Calabro said. "Lawmakers must take care to balance cuts and economic stimulus without depleting reserves."

Subsequent Budget Watch reports will provide specific recommendations for achieving these goals.