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Hernando Today

Economist Urges County To Diversify

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By MICHAEL D. BATES

Hernando Today

Published: March 19, 2009

Hernando Today

BROOKSVILLE - Economist Bill Fruth had a vital message for community leaders Tuesday if they want to lift the county out of its economic quagmire - focus everything on economic development.

"This is for your survival," Fruth said, speaking before about 95 people at the bi-annual community summit at Silverthorn Country Club. "This isn't made-up stuff. To get out of this malaise you have to bring in new industry."

For starters, Fruth said he would invest $3 to $4 million a year for the next five years strictly to encourage economic development. Shelve any projects that don't create economic growth, such as park improvements, cultural projects and the like.

His prognosis: The bad economy here will remain for at least 12 more months, then flat-line for probably 10 years.

Until Hernando County reverses course from its dependence on retiree income and attracts more diversified industry, the local economy will continue to stagnate, Fruth said.

"Today, because of the collapse of the construction industry (you) are virtually a 100 percent retirement-based economy," said Fruth, president of POLICOM Corp., an independent economics research firm in Palm City.

And because of its large senior population, much of the money circulating in the county is in the form of government transfer payments, such as Social Security, Medicare and Medicaid.

That tends to breed low-paying service jobs and is one of the reasons why Hernando County's average wage of $28,570 is one of the lowest in the nation.

That, combined with some of the lowest-paying construction jobs (what little of those are left) means there is little surplus disposable income around.

Fruth, as he did two years ago when he gave his last economic forecast to community leaders, did not sugar-coat the facts.

"Reality's reality, and you're going to have to live with it," Fruth said.

Construction, he said, will be "dead in the water" for at least two more years because there are no other industries in the county to cause a demand.

In fact, construction employment levels that reached their peak in 2005 "will not return for at least 10 years, if ever," he said.

Fruth said the county is paying a heavy cost for the abnormally high supply of homes built during the boom years between 2003-06. Most of them are now in foreclosure or abandoned.

Property values, he said, will continue to decline for at least 12 more months, reaching levels not seen since 2001.

Fruth said what happened in Hernando County is indicative of scores of other counties in Florida - it outgrew demand.

Hernando grew too fast because of population growth and speculative construction and not enough internal industrial growth.

Fruth warned revenue to local government will continue to decline, so it is imperative commissioners not go on a spending spree.

And don't rely on any federal stimulus money, he said.

Nothing the feds can give Hernando "will have any material effect on your economy," he said.

Even if the county receives $5 million or so for a road project, it will put people to work for a year and then the employment situation will be back where it was, he said.

Community summit coordinator Len Tria said Fruth is scheduled to return to Hernando County at the end of April to give another presentation before the county commissioners at one of their workshops.

Fruth's recommendations are important and must get out to the general public, Tria said.

Reporter Michael D. Bates can be reached at 352-544-5290 or mbates@hernandotoday.com.

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