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Business Observer Friday, Jan. 30, 2009 10 years ago

Time to Act

A state Senate select committee is created on the fast-track to accelerate economic recovery. It's 'hard-wired' to the Senate floor, bypassing committee logjams.

A state Senate select committee is created on the fast-track to accelerate economic recovery. It's 'hard-wired' to the Senate floor, bypassing committee logjams.

Under a cloud of urgency, Florida Senate President Jeff Atwater, R-North Palm Beach, launched the newly formed Senate Select Committee on Florida's Economy with the charge that “we must act.”

With rising unemployment, record foreclosures, moribund construction, an ongoing financial crisis and a failing state economy, this was not created as just another political committee.

It has been given broad latitude and is endowed with the unusual power of being “hard-wired” to the Senate floor, meaning its recommendations bypass the slogging committee process to head straight to a vote in the Senate.

The committee plans to use both the latitude and the power to push for some striking changes in law and regulations, including the possibility of extending state and local permits and approvals for three years, enacting a three-year moratorium on impact fees, suspending concurrency and financial feasibility requirements for three years and implementing a property assessment cap.

The goal is to ease up on regulation and taxes and other burdens to business to grease the way for a quick recovery in the Florida economy. There are some big hitters on the committee that just might have the heft to pull it off.

Two of the committee's 11 members are from the Gulf Coast — Sen. Mike Bennett, R-Bradenton, and Sen. Garrett Richter, R-Naples. Their stated mission, hopefully not impossible, is “to create incentives and eliminate disincentives to economic recovery and growth and to ensure that government functions more simply, more transparently, less expensively, and more effectively.”

Easier said than done, even in this economic climate.

Calling it “the most important issue facing Florida — creating and ensuring an environment for economic success for all Floridians,” Atwater asked the committee to “dig deeply into the foundations of Florida's economic structure, seriously challenging the notions upon which it has been built.”

Being “hard-wired” to the Senate floor allows bills or constitutional amendments offered up by the committee to be fast-tracked around traditional committee reviews, exemplifying the priority given to the committee's mission.

The committee's efforts come on the heels of Governor's Crist's “Accelerate Florida: Extending Florida's Economic Horizons” stimulus plan initiated last year. According to a Jan. 1 progress report, the plan is designed “to suggest ways that government can remove barriers to growth and stimulate Florida's economy.”

According to Sen. Don Gaetz, R-Ft. Walton Beach, items include major venture capitalists helping the committee understand how Florida can attract capital, marine industries, port, shipbuilding and refitting. More meetings are planned to be scheduled for the Gulf Coast area.

Economic crossroads
A panel at a Jan. 13 meeting reported, “We believe...we are at an economic crossroads.” In the report titled, “Transitioning Florida's Economy: Recommendations for Recovery,” House Speaker Allen Bense presented a sweeping laundry list of proposals addressing business climate and governance issues.

Number one on the list of recommended fixes for the state business climate is stable and predictable taxes and insurance. Specific, ambitious, recommendations include:
• Restoring the attorney fee cap to keep workers' compensation rates competitive;
• Lowering the burden of proof in property tax challenges;
• Creating a permanent fix to the Corporate Income Tax glitch;
• Reducing Citizens' assessment base;
• Reducing CAT fund exposure;
• Requiring actuarially sound policies for Citizens' policyholders;
• Enacting a non-homestead assessment cap;
• Enacting a three-year moratorium on impact fees.

Gaetz believes the economic situation is so dire that he firmly believes Florida is beyond a crossroads and in need of expedient action.

“I don't think it's at a crossroads,” he says. “The fact is that we are in a serious and deepening recession. Unemployment is approaching 10%. New food stamp claimants in the last year exceeds the total (of all claimants) in Virginia. We have 200,000 new people on Medicaid in the last year, over 300,000 properties vacant and unsold on a parched real estate market. We're in a serious and deepening recession. Every indication is that it will get worse before it gets better.”

Gaetz's comments support two key findings of a December report posted for the Committee on the Senate's website: “U.S. consumers will be responding to massive wealth destruction and tighter credit markets,” and that “Recovery in the Florida housing market is not anticipated until April 2010, at least.”

Other recommendations are to reduce permitting time by at least 50%; establish uniform permitting processes and expedited approval at the state and local levels; extend all state and local permits and approvals by three years; emergency permitting (maximum 30 days) for targeted industry clusters.

“The Select Committee will consider legislation to largely suspend or repeal many of the concurrency requirements,” Gaetz says.

Developments of Regional Impact are the subject of five recommendations to streamline the process, extend approvals and ease requirements.

Bennett is pleased with what he has heard.

“We're getting a lot of input from the business community telling us the way you can help us the most is to cut down on government regulations. It makes it too difficult for people to stay here and businesses to come here,” he says.

Just last year, DCA Secretary Tom Pelham called the state growth management act “a huge, bloated piece of legislation.” Bennett jumps on that point.

“We need some change to the growth management laws so we can act faster,” he says, adding the need to reduce the intangible tax, eliminate the tax on manufacturing equipment and possibly waive impact fees.

“You got to look at it all,” Bennett says. “You've got to reduce taxes to get businesses here. We cannot tax our way out of a recession.”

Bense also made a series of governance recommendations starting with an objective evaluation of sales tax exemptions.

In the “NOW” category — which may mean look for these in proposed bills this session — are proposals allowing university tuition increase up to 15% annually up to the national average,” suspending concurrency requirements for three years and streamlining the Department of Community Affairs' review of comprehensive plans.

The three-year moratorium on impact fees (infrastructure) was also in the “NOW” column.

A consortium of business economists and policy analysts have committed to participating in the effort “to provide the research and analysis necessary to support the work of the Select Committee.” An economic policy all-star team of nine researchers are led by such familiar names as University of Florida Professor David Denslow, Hank Fishkind and University of Central Florida economist Sean Snaith of the Institute for Economic Competitiveness.

The research team's plan of work calls for delivering their baseline data describing Florida's economic condition by Feb. 1, and by Feb. 20 deliver a “meta-analysis of best practices of other state and local governments which have acted effectively to improve economic performance and competitiveness and reduce nonessential costs and functions of government.”

The researchers will also create forecasts of the potential impact of specific policy options considered by the committee

Moral obligation
Gaetz's passion for the issue is balanced by his realistic views.

“President Atwater has said that this is the most important job of the Senate to do what we can as soon as we can to get Florida ready to be stronger with a more resilient economy,” he says. “The only way we will get revenues to pay for school, healthcare and law enforcement is if more people have jobs and there is more business activity.”

Emphasizing that regulatory costs of development often exceed land cost, Gaetz summed up the committee's goals.

“Our mission is to identify and remove obstacles which state and local government may have placed in the way of business activity,” he says. “Florida's state government cannot reverse the crisis, but it's our moral obligation to try to improve the odds for Florida's families and businesses. A couple years ago everyone was talking about growth management. Now, we wish we had some growth to manage.”

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