Florida a top ranked economy? Not so fast, report says

By William Patrick | Florida Watchdog

TALLAHASSEE, Fla. — When it comes to economic rankings, especially by free-market leaning outfits, Florida often ranks near the top.

It’s a point of pride for Sunshine State lawmakers, even those typically opposed to low taxes and light business regulations.

But according to a new American Legislative Exchange Council study called Rich States Poor States, Florida doesn’t even rank in the top 10.

Sitting squarely in 16th place, Florida is in the second tier of states in overall economic outlook. That’s seven spots below neighboring Georgia and three behind another large southern state, Texas.

Florida’s overall economic ranking, slightly different than its outlook, comes in at 19th, according to the ALEC study.

What gives?

“Much of the slide is due to the fact that other states passed Florida by enacting significant reforms,” said Jonathan Williams, director ALEC’s Tax and Fiscal Policy Task Force and co-author of the report.

“Sometimes states fall behind by standing still,” he said.

An area ripe for improvement is pension reform, he said. Attempts to pass legislation aimed at shoring up the Florida Retirement System’s $21 billion in unfunded liabilities failed last year, contributing to a one-year slide from 9th to 16th.

This year taxpayers are on the hook for another $500 million pension fix. A current proposal designed to encourage government workers to choose a 401k-style retirement benefit over the popular defined-benefit plan is still alive in the Legislature, though public sector unions oppose it.

Despite earning high marks for a progressive income tax, no personal income or estate tax and for being a right-to-work state, Florida ranks toward the bottom for its sales tax burden, tort litigation and judicial environment.

It could be worse. Rhode Island, Oregon and Montana rounded out the bottom three spots, though the usual suspects of Illinois, California and New York weren’t far behind. Utah, South Dakota and Indiana were rated tops among states.

The study measures 15 separate factors that together influence job growth, income growth and population growth. It doesn’t address the distribution of wealth, but Williams said economic prosperity has a positive effect on all social classes.

“Lower ranking states have relatively high levels of income disparity,” Williams said. “In New England, the state with the lowest level of income disparity is New Hampshire, the most freedom loving state in the Northeast.”

Contact William Patrick at wpatrick@watchdog.org