Fla. economists look at oil spill revenue losses

Associated PressJune 23, 2011 

TALLAHASSEE -- The complex task of determining how much revenue, whether it be sales taxes or hunting and fishing license fees, that Florida lost due to the Gulf of Mexico oil spill began Wednesday.

State economists held the first in a series of meetings that may not be completed until early next year as part of the effort to come up with a number Florida can present to BP for reimbursement.

The British oil giant owned the Deepwater Horizon well that spewed oil into the gulf. The spill crippled many fishing and marine-related businesses and caused tourists to stay away from Gulf Coast states, although most of Florida’s beaches were unaffected. That reduced a variety of tax and fee collections.

The first thing the economists agreed to do was take a statewide approach rather than focus just on the Florida Panhandle, which was most directly affected, and the only area where oil or tar balls reached beaches and bays.

“Given the national news of the oil spill you have impacts on the brand ‘Florida,”’ said Christian Weiss, an economist in Gov. Rick Scott’s office.

“Certainly from a foreigner’s perspective who hears about ‘Florida oil spill’ I’m not sure they necessarily were able to distinguish between Pensacola Beach, Pinellas Beach or Palm Beach,” Weiss said.

The economists, though, were less certain of whether they’ll include local as well as state revenues, although they often are intermingled. For instance, local governments get shares of state sales and gasoline taxes. The revenue-estimating conference plans to first take a closer look at what local governments already have received from BP and the methodologies they used to support their claims.

In any case they plan to come up with their own methodology rather rely on what BP has developed for use with government revenue loss claims.

BP figures show the company has paid cities, counties and other local entities in Florida about $10.6 million for revenue losses. That’s in addition to millions more for cleanup and other spill-related expenses.

The economists noted that Escambia County, closest to the spill that occurred off Louisiana, has received $1.8 million for the loss of such revenues as tourist development taxes, bridge tolls, local option sales and gasoline taxes and electric and natural gas franchise fees.

“If we come up with a lower number than Escambia ended up with then Escambia got a good deal,” said Jose Diez-Arguelles, staff director of the Senate Finance and Tax Subcommittee. “If we come up with a higher number Escambia got a bad deal.”

The economists also want to take a closer look at unemployment compensation taxes attributable to the spill. They were surprised the Agency for Workforce Innovation has been able to confirm only 711 workers across Florida collected spill-related unemployment benefits.

The agency came up with that number based on a question on application forms. Applicants were asked if they lost their job due to the spill and the agency then obtained confirmation from employers.

The spill affected sales tax, the state’s biggest single revenue source, in two ways, said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research.

One was that Floridians reduced spending because of spill-related income losses or uncertainty, Baker said in an interview.

The state also lost sales tax revenue due to the tourists who canceled or never came to Florida. That was largely due to the effect the spill had on the state’s brand or image even though the physical damage was much less, she said.

“That’s going to be the by far the hardest thing that we have to put a number on, but I think there’s enough academic research out there and studies out there,” Baker said.

Her office has contracted with the University of Florida to conduct such a study on tourism and branding but it’s not expected to be finished until the end of the year.

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