TALLAHASSEE (AP) – Florida’s taxable property values will keep dropping for another year but at a slightly slower pace than previously forecast before beginning to rebound in 2011, state economists said Thursday.

The new estimate will mean a smaller decline in property tax dollars than had been expected for local governments and schools if tax rates remain unchanged. However, it still would leave a potential $540 million shortfall in property taxes that go into the state’s public school funding program for the 2010-11 budget year.

The economists estimated taxable property values will drop about 5.6 percent in 2010 to about $1.53 trillion. That’s down a percentage point from the 6.6 percent decline they had forecast earlier this year.

“We’re slightly less pessimistic than we were,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “Overall the changes weren’t huge.”

Economists for the Legislature, governor’s office and Department of Revenue also predicted property values, which began dropping in 2008, will turn around with a 1.7 percent uptick in 2011 to about $1.56 trillion – about $30 billion more than in the previous forecast.

They also estimated increases of 3.2 percent in 2012, 4 percent in 2013 and 3.9 percent in 2014. The estimates each reflect the prior year’s real estate activity because Florida has a Jan. 1 assessment date.

The new forecasts will go into the state’s annual three-year financial plan to predict future property tax revenue.

The economists also will meet within the next couple weeks to develop an estimate for general state revenue for the three-year plan.

This fall they’ll revise the forecasts for Gov. Charlie Crist’s budget recommendations and again in the spring with final estimates the Legislature will use in writing the next annual state budget.

The economists had estimated a 12 percent decrease in property values for the current budget year, but the actual decline turned out to be a bit less – 10.8 percent.

They still expect most of the assumptions that went into that forecast, such as defaults, foreclosures and price reductions, to happen, but just a bit later.

“We weren’t wrong,” said Senate economist Alan Johansen. “We just had the timing wrong.”

The new forecast also predicts a continuing decline next year in benefits for primary homeowners from the Save Our Homes Amendment.

The constitutional amendment caps annual increases in assessments for homesteads at 3 percent or the rate of growth in the Consumer Price Index, whichever is less.

That has reduced the taxable value of homesteads by billions of dollars compared with the market value, peaking at $427 billion in 2007. Since then, market values have dropped but the taxable value of many homesteads has increased.

That’s because of what’s known as the recapture rule. Even if a homestead’s market value falls, its assessment still goes up by the lower of growth in the Consumer Price Index or 3 percent.

As a result, the Save Our Homes gap in property value dropped to about $169 billion this year. It’s expected to narrow even more to $115 billion in 2010 before again increasing over the next five years – ranging from $127 billion in 2011 to $189 billion in 2015.