At the beginning of 2009 the national economy is in a serious downturn, and Florida’s economy is suffering along with the rest of the nation. From a public policy perspective, this raises the related questions of what Florida’s policymakers can do to support Florida’s economy, and what policymakers should do to maintain revenues to fund state and local government services. The short answer is that the state government has a very limited ability to improve economic conditions in Florida, but poorly-considered policies have the substantial potential to make things worse. The Legislature should concentrate on laying the foundation for long-run economic growth by maintaining a lean government, foregoing the temptation to increase taxes when the economy is struggling, pursuing capital projects where funding permits, and reducing tax and regulatory barriers to business activity in the state. Looking beyond short-run problems, Florida has one of the better fiscal structuresin the nation, and the Legislature should concentrate on maintaining and increasing the state’s advantages in the long run, despite considerable short-run challenges.

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