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Featured Advisor

Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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High Unemployment Tops Florida's Woes

The “Sunshine State” may be bright, but the state outlook is bleak. With a high unemployment rate and growing budget deficit, Florida is struggling to keep itself afloat.
Florida’s unemployment rate of 11.5 percent is higher than the national average of 8.9 percent, according to the Department of Labor. In the past year, the state’s unemployment rate had decreased slightly, but has remained above 11 percent for the past 15 months. According to Bloomberg, these numbers place Florida right behind California and Nevada for the nation’s highest unemployment rates. Yet, Florida’s government feels this is the right time to cut unemployment benefits.
Among the major changes the government is looking to make is decreasing the weeks of benefits that are offered from 26 to 20. Considering the national average is 17.7 weeks, this appears in line with other states. But with an unemployment rate 2.6 percent higher in Florida, the proposed change has become a hotbed issue.
Furthermore, Florida is in the process of reorganizing retirement guidelines for government employees. The Pew Center for the States, a nonprofit organization that identifies issues facing states, rated Florida as a “solid performer” for 2010 in regards to its pension plans. And according to Florida House of Representatives’ records, Florida has traditionally been in the top three funded public plans in the country.
In addition, Florida’s government is looking to implement other changes due to its $3.6 billion deficit. The government needs to cut spending in order to get the state budget under control. However, one government branch has run into some difficulties.
Because foreclosures have been consistently high, the Florida court system set its operating budget factoring in this revenue. They expected 64 percent of budget revenue to come from filings and related costs of foreclosures. New regulations have slowed filing foreclosures and importantly, the foreclosure rate in Florida fell 74 percent over the past year, according to Realty Trac, Inc. Although the decrease in foreclosures would normally be good news for a struggling state, the drop in foreclosures has caused serious shortfall for the state budget.
Another issue causing trouble is the flight of residents from coastal cities. According to the Florida Herald-Tribune, full-time, tax-paying residents are being replaced with vacationers and tourists. In the early part of 2000s, developers began to construct vacation rentals to capitalize on growing tourism. They bought out residents in order to maximize revenue from coastal attractions. These coastal towns have raised taxes, but the remaining residents can’t absorb the tax increases, so they leave.
Governor Rick Scott is hoping to pass proposed changes to government pension plans along with revamping unemployment benefits to keep Florida afloat. The news is not all bad, however. Fourteen percent of Florida employers plan on hiring new employees this year and the hospitality industry is leading growth indicators in the state, according to Bloomberg. The success of the Governor’s cost-cutting initiatives and the cited positive economic factors might indicate that Florida might be poised for a turnaround.