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Business Observer Friday, Jan. 27, 2012 7 years ago

Capitol Chatter: Jan. 27

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The most important issues being talked about in Tallahassee.
by: Rod Thomson Staff Writer

Privatizing prisons back on the docket
After a Leon County judge tossed out a plan to privatize state prisons in 18 counties last year, the Florida Legislature is going at it again. The judge ruled the state should have approved the privatizing in a stand-alone law and not as part of the state budget.

It's what's known as a technicality.

So legislative leaders have introduce the bills again to turn over the operations of 29 prisons to private companies in money-saving moves. It is the largest prison privatization effort in the nation.

Facing another $2 billion shortfall with no end of budget problems in sight, the prison plan offers savings that range from $22 million to $40 million — the latter ironically equaling the amount of new money that Gov. Rick Scott wants to spend on the Everglades restoration project.

The proposal is not without controversy. The Fraternal Order of Police, the union representing prison guards, agrees that the move will save money, but says private firms save money by being less safe. And Democrats, supported by government unions, have been opposing most government employee cutbacks.

The bill passed the Senate Rules Committee and heads to the Budget Committee. A mirror bill is working its way through the House.

FPL seeks rate boost, 11.5% rate of profit
Oh to be a regulated monopoly.

Florida Power & Light notified the Florida Public Service Commission last week that it wants to increase base rates by $695 million next year to help pay for a new power plant and other infrastructure costs. The utility is asking to earn 11.5% return on equity, essentially guaranteed profits.

Notification to the state is the first step in a lengthy process that involves the PSC and consumer and business groups. If approved, most of the hike would start showing up in bills in January 2013, with the rest in June 2013 when a new power plant in Cape Canaveral begins operations. FPL argues that new projects are not only necessary, but they improve plant efficiency, which tamps down long-term costs for all customers.

The state's second-largest utility, Progress Energy Florida, is expected to file a rate case early this year.

Included in FPL's request is the desire to earn a return on equity of 11.25% -- a common measure of profit. Plus, it wants to earn another .25% if it continues to have the lowest customer bills in the state. In a case pending before the PSC now, the state Office of Public Counsel, which represents consumers in utility cases, argues that Gulf Power Co. in the Panhandle should only be able to earn 9.25%.

Another shot at big-time sports
Sen. Mike Bennett, R-Bradenton, continues his crusade to make professional sports teams with government-built stadiums — which is all of them — to provide shelter for the homeless as is required by a little-known 1987 law.

Bennett wants a law passed that would require the owners of Florida's many professional sports teams -- such as the football's Tampa Bay Buccaneers, baseball's Tampa Bay Rays and hockey's Tampa Bay Lightening -- to provide the shelter or lose $166,000 per month.

In the peculiar world where government and billionaire team owners meet, not only does government build the stadiums, but professional sports franchises also get $166,000 in tax breaks for 30 years.

Striking a populist pose during a committee meeting last week, Bennett said, “We have spent over $300 million supporting teams than can afford to pay a guy $7, $8, $10 million a year to throw a baseball 90 feet. I think that they can pay for their own stadium.”

This past year, the NFL blacked out games from being shown locally for teams in Tampa, Miami and Jacksonville because they were not sold out.

So in a step of further populism, teams would be fined $125,000 in the event games are blacked out locally. And Sen. Mike Fasano, R-New Port Richey, went even further, adding an amendment requiring pro teams to purchase tickets for veterans, the homeless and needy kids and their families if games are blacked out in the local area.

Florida has three NFL teams, two MLB teams, two NBA teams and two NHL teams, plus three arena football teams.

ObamaCare hammer coming down
In a taste of what is to come under ObamaCare, the U.S. Department of Health and Human Services has rejected Florida's appeal of a federal decision to place another financial requirement on private health insurers.

The controversial 2010 law that overhauls the health care market includes a provision forcing individual market insurers to spend 80% of their premiums on patient care. It's called the “medical loss ratio,” and the Florida Office of Insurance Regulation, recognizing a destabilizing risk, asked that it be phased in over time.

No, was the response.

“We have found no basis to modify our previous determination,” HHS said in a letter to the state. Expect more overriding dictums from Washington, D.C., to the states under the law.

Nelson swamping opponents in fundraising
Among the top candidates in the crowded Republican field for the U.S. Senate, U.S. Rep. Connie Mack raised more than $750,000 in the quarter that ended Dec. 31, and reports nearly $1 million in the bank. George LeMieux on Friday announced his campaign raised $388,505 for the quarter. The LeMieux campaign reports $1.1 million cash on hand. Last week, U.S. Sen. Bill Nelson announced his campaign raised about $1.4 million during the final three months of the year. The 12-year Democratic incumbent reports $8.4 million on hand awaiting the winner of the Republican primary.

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