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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

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And I'm Noah Adams.

For a century, the Sunshine State of Florida has been a population magnet, one of the fastest-growing states in the country. But demographers are reporting that last year, Florida's population actually shrank. The last time that happened was more than 60 years ago. As NPR's Greg Allen reports now, the population loss comes as a shock to a place where growth is an industry as well as a foundation of the state's economy.

GREG ALLEN: Boom and bust cycles are nothing new here in Florida. Ever since the 1890s, when Henry Flagler extended his railroad down the state's Atlantic coast, Florida's history has been one of economic ups and downs. Throughout it all though, one constant was the state's steady population growth - that is until now. Stan Smith, an economist at the University of Florida, says last year Florida's population dropped by 58,000 people. He says there are two main factors: The poor economy means there are fewer jobs to attract workers to Florida, then there's also that little problem with housing.

Professor STAN SMITH (Economist, University of Florida): When people have a difficult time selling their homes, as we've seen recently, that makes it difficult for them to move. So people who might otherwise have moved to Florida have either put that off indefinitely, or at least put it off for some period of time.

ALLEN: Out of a total population of 18.3 million people, a loss of 58,000 residents may not sound like much. But it's a trend that clouds the future of places such as St. Lucie County on Florida's Atlantic coast. County Commissioner Doug Coward notes that just a few years ago, it was one of the fastest-growing counties in the nation.

Mr. DOUG COWARD (County Commissioner, St. Lucie County): At one point, we had about 100-plus thousand homes that were proposed by out-of-town developers, which would nearly double the housing stock for a community that's has been in existence for more than 100 years. And they wanted to accomplish that feat in about three years. So the amount of speculative building and development was just unprecedented.

ALLEN: Today that building boom is just a memory. Residential building has ground to a halt. As construction jobs dried up, many people left the area to find work elsewhere. Across the county, several thousand homes now stand vacant. The population decline is perhaps most obvious in the schools. I'm standing out of what was Port St. Lucie Elementary. It's vacant now and slated for demolition. It was one of two schools closed in St. Lucie County last year, in part because of the district's declining enrollment. Port St. Lucie Elementary's Principal Glenn Rustay says closing the school was tough for the students and the teachers.

Mr. GLENN RUSTAY (Principal, Port St. Lucie Elementary): When you work at a school, you put everything into it. And the teachers put everything into it. And you're losing your second home almost.

(Soundbite of school hallway)

ALLEN: Many of the students and teachers transferred to another nearby school, Northport K-8, where Rustay is now the principal and a familiar figure in the hallway.

(Soundbite of school hallway)

Mr. RUSTAY: Oh, I love the kids. They're great.

ALLEN: Two years ago, there were 42,000 students in St. Lucie County schools. This year, 36,000 showed on the first day of school, although county officials expect that number to rise as latecomers straggle in. For the state, county and city governments in Florida, a declining population means a declining tax base. That, combined with the housing collapse, would spell trouble anywhere. But Florida is a state that built its economy on the promise of growth. It's one of just seven states with no income tax. Instead, relying heavily on sales and property tax revenue.

Even before the construction industry went bust, there was trouble in paradise. Sean Snaith, an economist with the University of Central Florida, notes that as the economy boomed and housing values skyrocketed, the cost of living also climbed - for some people, out of reach.

Professor SEAN SNAITH (Economist, University of Central Florida): That's led to some changes in the demographics of the state, both a slow in growth rate. But we're also seeing people leave Florida to go to the Carolinas or to Tennessee in search of a lower cost of living.

ALLEN: A combination of all these factors has led some writers and observers to dub Florida the Ponzi State — one that's now primed for collapse. Economist Stan Smith.

Prof. SMITH: Some people believe that Florida is over as a state. You see that in headlines. I really don't see it that way.

ALLEN: Smith says Florida's population drop, while attention-getting, is a short-term thing. The factors that have drawn people here for decades - the weather, the beaches - will continue to attract newcomers to the state. And the looming retirement of the baby boom generation is expected to eventually bring back growth with a bang. But that doesn't mean things are rosy here in paradise. Economists, planners and elected officials like St. Lucie County Commissioner Doug Coward say Florida needs to take a hard look at itself.

Mr. COWARD: We simply can't continue business as usual. It's not sustainable. So, it's a learning lesson, and that's the key, is - are we going to learn from this, and are we going to change our ways and do better for the future of the state and this country?

ALLEN: That means making tough decisions on tax policies and moving to diversify the state's economy, so that Florida can become known for more than oranges, beaches and retirement communities.

Greg Allen, NPR News, Miami.

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