1. Fewer Out-of-Staters Move to Florida Written by: Mike Schneider Detroit Free Press February 20, 2009 Presented by: Rebecca Grace ECO7500 February 24, 2009 http://www.freep.com/apps/pbcs.dll/article?AID=2009902200340

2. Who’s coming? Who’s going? The number of applications from out-of-staters for Florida driver’s licenses dropped 30% over 5 years. New York and New Jersey have snubbed the sunshine state the most. People are still coming: Florida’s population increased 127,000 in 2008. Those coming are choosing south Florida Michigan ranks fourth in out-of-state applications for Florida licenses. In 2008, roughly the same number of people moved into the state as those who moved out-of-state.

3. Why aren’t people coming? According to Jan Vink, Cornell University, there are several possible reasons people are not moving to Florida: – The recession – Awful housing market – Hurricanes – High insurance costs – Battered retirement funds – The end of the “9/11 effect” Another reason: state with the most shark attacks.

4. Why is this a problem? Florida has depended on population increases to support their economy. The state has sub-tropical weather and relatively inexpensive housing prices. New residents buy the inexpensive housing, are added to the tax base and create demand for shopping centers, schools, parks, and other goods.

5. The Value of the Home and Tax Rates P ni = Dy n + D (X i -t i p ni ) B i = Σ P ni /n X i = t i B i Suppose we have a Florida community with houses valued at $150,000 each. The citizens of this community decide they want $10,000 worth of public goods. So, their tax rate is: – X i = t i B i – 10,000 = t i 150,000 – T i =10,000/150,000 = 6.67%

6. The Value of the Home and Tax Rates But, people are leaving, foreclosure is high, and home values are decreasing. So, – X i = t i B i – 10,000 = t i 125,000 – T i =10,000/125,000 = 8% So, the amount of taxes a citizen must pay (8%) are greater than the value the citizen places on the desired goods (6.67%). Citizens will discover they are able to get a better deal for their money elsewhere. If we think of the states as communities, citizens will move to a location that better matches their preferences, as Tiebout has suggested.

7. Final Thoughts Retirement funds play a large role into the decrease of people moving to Florida. – Florida: 17% age 65 and older – U.S.: 12.6% age 65 and older Florida is still gaining residents, but at a lower rate.