The Deepwater Horizon oil rig disaster could lop $2.2 billion off Florida’s still-fragile economy and cost 39,000 jobs mostly in the tourism and fisheries industry, a University of Central Florida economist predicted Monday.
Photo captured during an overflight on May 26. Credit: NOAA
Hotel and restaurant industry leaders said the first signs of that decline are emerging as the encroaching oil spill diminishes what for most had been a strong Memorial Day weekend, possibly fueled by the state’s television advertising campaign.
“It’s been a rollercoaster,” said Carol Dover, president of the Florida Restaurant and Lodging Association. “Over Memorial Day, we had come back almost to normal. But occupancy heading into June, July and August has just tanked after that.”
The economic effect of the massive spill and prospects of a summer-long cap-and-clean effort came into sharper focus Monday, with President Obama acknowledging the disaster would have a “substantial” impact on Gulf states. Florida Sen. Bill Nelson warned that a continuing flow of oil could result in currents bringing the spill to the Atlantic Coast, resulting in no “beach that’s going to be spared.”
Meanwhile, Gov. Charlie Crist activated a state loan program Monday, allowing Gulf coast small businesses to borrow as much as $25,000 each to offset losses stemming from the spill.
Dover’s statewide board is scheduled to meet this week in Miami to take stock of the potential decline caused by the spill. A Gulf Oil Spill Economic Recovery Task Force organized by Crist also plans to meet Wednesday to begin assessing the impact and coordinate recovery.
But Sean Snaith, a UCF economist, said early analysis of the disaster points to a potential $2.2 billion loss in Florida’s gross state product, a reduction that will turn into a loss of sales-tax and tourist-tax revenue certain to dent next year’s state budget, already expected to be staggered by a $6 billion shortfall.
Snaith also said about 39,000 jobs could be eliminated in coming weeks, as the leisure, hospitality and fishing industries retrench in the face of a decline in visitors. Florida’s 12 percent unemployment rate already tops the national average.
“This is a punch that lands in Florida even while we’re still on wobbly legs,” Snaith said.
Florida’s budget picture has been improving. State officials reported that tax collections had climbed $102 million over estimates in April – the month the Deepwater Horizon exploded off Louisiana. Sales-tax, which provides almost 75 percent of Florida’s general revenue, and corporate income tax collections were the top gainers, according to the state’s Office of Economic and Demographic Research.
Crist has asked for $200 million from BP — which leased the Deepwater Horizon rig — to air television advertising, offset economic damage to Florida, and conduct scientific monitoring of the spill. It’s uncertain what effect such spending could have on blunting the spill’s broader economic effect, but some analysts said that money won’t ripple very far.
Chris McCarty, a University of Florida economist, said that BP payments will not offset real estate losses or revenue diverted from what he called secondary businesses not directly affected by the spill. Still, it’s possible that Florida’s Atlantic ports could draw increased traffic – and revenue – if ships look to avoid Gulf oil.
“There’s going to be a massive transfer of wealth from BP to the Gulf states,” McCarty said. “But it’s going to be difficult to gauge what effect it has on these economies.”
Gary Chernekoff, a plumber from Pensacola, said Monday that he’s already felt the impact of the oil pooling off Panhandle beaches. Chernekoff said he had three jobs cancelled recently after a builder chose not to go forward with rental construction work amid the threat of oil-stained beaches.
Losing the contracts means weeks with no work, he said.
“I’m telling you, that was a kick in the pants,” Chernekoff said.
By John Kennedy
The News Service of Florida
