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REVIEW SUMMARY
What. Legislators' bills affecting business in the session starting March 2.
Issue. Jobs bill and tax incentives competing for money and attention.
Impact. Effects of business and job growth bills could be limited by other threats.
In the midst of an historic recession and record unemployment, add more challenges for the Florida Legislature — an optimistic budget, major threats to the state's agriculture industry, and the potential economy killer Amendment 4.
Yet, local governments are suing the Legislature for passing an impact fee reform bill last year. That legislation leveled the playing field by shifting the burden of proof for fee calculations from challengers to the local governments initiating the fees.
Another group, including some of the same Gulf Coast governments, are suing the state challenging amendments to growth management laws. Last year, Senate Bill 360's key provision removed a layer of state oversight leaving local governments the option of imposing transportation concurrency rules in dense urban areas. Now, a growth management “glitch” bill, Senate Bill 1742, is on the legislative agenda.
With all that hanging over its head, the Legislature has a daunting task before it in 2010 session beginning March 2. That increasing workload may help explain a bill calling for a study of the pros and cons of a full-time Legislature. Regular sessions are limited to 60 days, but special sessions have become a more frequent event in recent years.
In the meantime, legislators will have to figure out how to balance the urge to spend money to make money versus cutting spending and taxes to reduce the burden on a struggling citizenry.
To do that, Florida House members have adopted key principles to guide them, including the creation of a legal and regulatory environment that fosters economic growth and job creation; and lowering the tax burden on families and businesses.
“This year, it's true, everything is about the economy and everything is about jobs,” says Sen. Mike Bennett, R-Bradenton.
Now, as chairman of the policy and steering committee on commerce and industry, and still chairman of community affairs, Bennett will be at the center of debate on key bills about jobs, taxes, insurance and growth management.
He's sponsoring 64 bills and co-sponsoring eight others — so far.
Though the governor's budget includes an additional $2.7 billion over last year's down-sized $66.5 billion budget, it has been roundly criticized by legislative leaders.
For one, it assumes an additional $1 billion of federal money will materialize on top of $3 billion already expected from Uncle Sam. And $433 million of gambling revenues depend on a previously rejected Seminole Indian Tribe compact.
If at least 60% of voters don't go along with the proposal of Rep. Will Weatherford, R-Wesley Chapel, to hold class sizes to the current school average standard, that will add an estimated $350 million to the education budget. Gov. Charlie Crist supports Weatherford's bill, and proposes another $100 million for higher education.
It's also the second and last year for receiving federal stabilization funds for education, so an extra $1.35 billion won't be available next year unless Congress keeps Treasury's printing press rolling. That loss is part of an overall “flameout” of federal subsidies, which means the state has to find replacement revenues going forward.
One Bennett bill would do away with class size requirements altogether, but it appears Weatherford's alternative, being more of a compromise, has the best chance to fly given the Florida Education Association's opposition to either change. FEA is the teachers' union lobby.
Tax bills
The first legislation likely to make it to the floors of the House and Senate are companion bills to push off previously approved increases in unemployment taxes. But it's a “pay me now, or pay me later” proposition.
Already, committees have approved House bill 7033 and the identical Senate bill. Without the change, the minimum rate for employers was to go from $8.40 to $100.30 per employee per year. The maximum rate is set to rise from $378 to $459.
Now, the increases are put off for two years and the wage base to which the rates apply drops back to $7,000 from $8,500. Employers would still end up paying higher rates through an assessment beginning in 2012.
Nonhomestead property owners and new homeowners would each get a property tax break by constitutional amendment if the Legislature chooses to adopt a joint resolution to place it on the November ballot. Senate bill 1254 and the identical House bill 655 reduce how much annual property assessments may increase from 10% to 5%.
The bills also gives homebuyers who have not owned a home the previous three years, the opportunity to receive an additional homestead exemption equal to 50% of the homestead property's just value.
Two other tax bills could also get lots of legislators' and lobbyists' attention this session. One, sponsored by Sen. Jeremy Ring, D-Margate, encourages economic development by changing the state corporate income tax calculation to be solely based on sales.
It has a string attached, though. It's subject to the taxpayer's capital spending and number of full-time employees, but Bennett says he likes its chances.
Now, the tax is determined half by sales — 25% by property value and 25% by payroll. By shifting it to what's known as the “single sales factor,” supporters say it will encourage more companies to set up shop in the state and hire workers.
But another bill, sponsored by another Democrat, Sen. Al Lawson, D-Tallahassee, would likely discourage corporate executives from doing what Ring's bill hopes to accomplish.
Senate bill 1406 recreates the annual intangible personal property tax that former Gov. Jeb Bush phased out.
'Jobs for Florida' bill
The 115-page “Jobs for Florida” bill was heard Feb. 9 by another of Bennett's committees, the Senate select committee on Florida's economy, established prior to the 2009 regular session. It also includes corporate tax provisions.
The bill calls for tax incentives for machinery, manufacturing and spaceports; a $1,000-per-job corporate income tax credit for businesses to hire unemployed Floridians; and expansion of the corporate investment tax credit for high paying jobs; and allows “qualified target industry” businesses to apply for the incentive. To help more small businesses, the bill reduces the job creation requirement from 100 to 50.
The bill also expands economic development programs including the Qualified Target Industry and Qualified Defense and Space Contractor Refund programs. However, the bill only increases the annual appropriation cap for the two programs from $35 million to $100 million. The actual spending must still be set by the Legislature in the budget.
Banking, insurance, real estate, construction and other business interests will also find much to follow. A summary of some key bills affecting business and industry follows, along with a list of other bills impacting the corporate world and Florida's economy.
BILLS THAT COULD IMPACT BUSINESSES
Senate Bill 216: Sales tax/review of exemptions and exclusions — Eliminates all sales, rental, use, consumption, distribution, and storage tax exemptions except those for general groceries, medical, guide dogs for the blind, and household fuels.
Senate Bill 234: Excise tax on documents/short sale — Imposes an excise tax on documents on the consideration for short sale transfers of real property. Excludes certain unpaid indebtedness from such consideration. Authorizes the department of revenue to adopt rules establishing arm's length criteria for short sale purposes.
Senate Bill 662/House Bill 771: Insurance — Prohibits an insurer that issues motor vehicle insurance from using a rate, rating schedule or an underwriting rule that is not contained in a rating manual and is determined on the basis of certain characteristics of an insured. Prohibits the use by insurers of credit reports and credit scores in making rating determinations.
Senate Bill 774: Renewable energy policy — Ratifies the rules on renewable portfolio standards adopted by the Public Service Commission.
Senate Bill 780/House Bill 987: Foreclosure proceedings/payment of fees —Requires a financial institution that institutes a foreclosure proceeding against residential property to pay all fees associated with the property. Provides for retroactive application.
Senate Bill 876/House Bill 447: Residential property insurance — Authorizes certain insurers — primarily those offering wind coverage — to use a rate different from otherwise applicable filed rates. Preserves authority of the Office of Insurance Regulation to disapprove rates as inadequate or disapprove a rate filing for using certain rating factors. Provides requirements for payment of the Citizens policyholder surcharge.
Senate Bill 1090: Corporate income tax — Provides for the apportionment of certain taxpayer's adjusted federal income solely by the sales factor provided in a specified provision. Provides for eligibility based on the taxpayer's capital expenditures and number of full-time employees.
Senate Bill 1098: Public works projects — Creates the “Florida Reemployment Investment Act.” Requires each state agency and private sector contractor performing services for a state or local government public works project being funded by state or federal funds to verify that 100% of onsite employees and independent contractors are state residents.
Senate Bill 1164/House Bill 151: Assessment of residential real property — Prohibits adding the value of some improvements to the assessed value of real property. Provides a limitation on the assessed value of real property. Specifies additional exceptions to assessments of homestead and nonhomestead property at just value.
Senate Bill 1254/House Bill 655: Property annual assessment/exemption — Proposes amendments to the state Constitution to reduce from 10% to 5% the limitation on annual assessment increases applicable to nonhomestead real property, provides an additional homestead exemption for new owners of homestead property.
Senate Bill 1448/House Bill 757: Workers' compensation claims/state reciprocity — Exempts certain employees working in Florida temporarily, and the employers of such employees, from the workers' compensation law under certain conditions. Provides requirements for the establishment of prima facie evidence that the employer carries certain workers' compensation insurance.
Senate Bill 1460/House Bill 949: Florida hurricane catastrophe fund/contract year — Revises method by which an insurer's retention is calculated. Revises contract years relating to minimum retention levels. Extends the expiration date of certain provisions of state law.
Senate Bill 1666/House Bill 7033: Unemployment compensation — Establishes temporary extended benefits for up to eight additional weeks of unemployment. Provides for state extended benefits for certain weeks and for periods of high unemployment. Provides for a suspension of lowering the amount of exempt wages under certain circumstances. Provides for an assessment on employers to pay the forecasted interest on advances received from the federal government to pay unemployment benefits.
Senate Bill 1742: Growth management — Revises transportation concurrency requirements. Requires that local governments develop a plan and long-term schedule of capital improvements for an existing or previously approved development. Revises provisions relating to calculating the proportionate fair-share mitigation to account for the present value of improvements made in earlier phases of development. Revises provisions relating to transportation concurrency backlog authorities establishing rights of owners and developers, and management requirements for local governments.
Other bills of interest
SB 116 — Debtors and collectors
SB 132 — Statewide legacy communities initiative
SB 156 — Tax on transient rentals
SB 204 — Streamlined sales and use tax agreement
SB 260 — Title insurance
SB 310 — Public records/proprietary confidential business information
SB 338 — Taxpayer rights/property appraiser's assessment
SB 680 — Tribal state gaming compact
SB 740 — Appointment of director of the office of insurance regulation
SB 774 — Renewable energy policy
SB 854/HB 125 — Rental property foreclosure or short-sale actions
SB 1056 — Local government prompt payment act
SB 1122 — Health insurance loss ratios
SB 1126/HB 773 — Expedited permitting and comprehensive plan amendments
SB 1146 — Landlord requirements following foreclosure action
SB 1184 — Tax credits for research and development
SB 1206 — Property tax exemption for renewable energy source device
SB 1338 — Limestone and sand mining wetlands mitigation
SB 1406/HB 675 — Recreates annual intangible personal property tax
SB 1430/HB 697 — Entertainment industry tax credits
SB 1472/HB 983 — Research commercialization matching grant program
SB 1552 — Appraisers and appraisal management companies
Jay Brady covers state and local government issues. He can be reached at [email protected], or at 941-362-4848.
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