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When Attorney General Bill McCollum announced his job-creation plan last week, maybe the most convincing element of it was the guy standing next to him — Steve Forbes.
Speaking to the Business Review after the Tampa unveiling, McCollum said that he sought Forbes' input when crafting his plan, calling it a “very collaborative” effort.
That's a good thing, because the plan is distressingly light on specifics and gaggingly heavy on empty political pabulum. If it is a “take my word for it” plan, it's probably a good idea to have at your side a veteran free-market economic reformer like Forbes, who remains popular in most conservative circles.
McCollum claims the plan will create 500,000 new jobs in Florida. Forbes' FreedomWorks group helped generate that number. “They can model and predict the job growth we're going to get,” McCollum said while waiting for an elevator at the Unversity of Tampa. He was, like all politicians on the campaign trail, running late. But his esteem for Forbes and trust in his organization was obvious.
There is a lot to like philosophically in McCollum's plan. It hits on the broad areas important to businesses and conservatives who understand capitalism, free markets and the heavy hand that taxes and regulations place on the back of the economy. He identifies the major problem areas, but specfiically how he will tackle them is frustratingly vague on most items.
+ Tax cuts in the margins
Here are the high points.
Lower the corporate income tax rate from 5.5% to 4.5%. This is more government at the margins, but at least it is the right margins. And it would not be much of a hit to the state measured by a static analysis.
Exempt corporate income taxes for certain qualified small businesses for the first 10 years. This could be a home run if the Legislature can really pass 10 years. That is long enough for a company to get established if it is going to, and tends to lock them in to Florida better. On the downside, and it is a recurring theme: the phrase “certain qualified” sounds like the same old targeted tax breaks that get so politicized and corrupted. See Florida's list of sales tax exemptions. Why not simply any startup gets it?
Reform Florida's property tax system. Save Our Homes was a necessary wall of protection from the big, grubby hands of government in the homeowners pocket just because values increased. It succeeded in shielding homeowners from rocketing property taxes. But it created serious inequities and burden shifting to snowbirds and commercial property owners.
Unfortunately, McCollum does not say what his property tax reforms are, just the vague and, frankly, useless promise to “work with local governments, business owners, consumer advocates and housing experts to make property taxes more affordable and predictable.”
Provide sales tax exemptions for certain high-tech business equipment and infrastructure purchases. Here again he has targeted taxes that too easily fall prey to small politicians' whims. If McCollum creates the right climate with other parts of his agenda, i.e. corporate income taxes reductions and a significant slicing of the red-tape that ties up so many businesses, then everyone can pay a modest and appropriate sales tax. We should not have politically favored companies and industries getting extra tax breaks. Bad policy.
Expand Florida's manufacturing machinery and equipment sales tax exemption. Under current law, to get this exemption a business must increase production by at least 10%. McCollum wants to eliminate the 10% threshold, which would align us with competing states such as Georgia, Texas and Virginia. Good. It applies to everyone.
Provide tax credits for research and development to generate growth and high-wage jobs. Targeted tax credits. Again. Every state is going after high-paying, high-tech jobs. Already, 32 states have this credit. It's about to turn into the high-tech industry equivalent to the professional sports franchise boondoggle, where every state and municipality must give away tax dollars to private enterprise just to stay even. This is more “government in the margins” when the focus should be on the parts that provide an overall business friendly climate.
+ The red-tape slayer? Maybe
Speaking of which, McCollum's plan also calls for scaling back the onerous regulatory burden weighing businesses down. He does so with an abundance of nice-sounding phrases but precious little detail — where the devil always lurks.
Here are the plan's main points.
Reduce duplicative regulations and implement a moratorium on many new regulations that would impede job growth in Florida. Which regulations? And a moratorium on which new regulations? Doesn't say.
Establish streamlined “one-step startup.” Calling Florida's business-blocking bureaucracy “notorious,” McCollum's plan gives the example of what a new business must go through just to get started, including trips to the Department of State for corporate registration, the Department of Revenue for tax certificates, the Department of Business and Professional Regulation for licensing and then several other stops in the labyrinth of the state depending on the industry. And that's just to open the doors and before a company must deal with county and city bureaucratic hurdles.
So he would create a “virtual consolidation” of state agencies allowing a new business to go to one Web site that will act as a portal for everything a company needs to get going.
Expedite permitting for projects that are ready and attempting to create jobs. A biomass plant in Hillsborough County that would employ 600 people has endured lengthy delays in the county's comprehensive-plan process. McCollum uses that example to show why he wants permits processed in 45 days, half the time of current law.
Here's the rundown on other elements of the plan:
• At the top: tort reform. This is simply critical. Florida ranks first nationally in overall monetary tort losses in 2008, according to the Tort Liability Index. It has the highest average medical malpractice rates in the country and is facing a shortage of physicians.
Alas, where McCollum's plan should offer specifics for reforming liability, it only offers twaddle, promising to “work with all stakeholders — business owners, healthcare professionals, attorneys and victim's advocates — to find concrete solutions.” That will work out well — we'll get the foxes, wolves and hens altogether to find a safety solution for the hens. Let's build concensus!
• Expand the low-interest lending project of the state's Economic Gardening Business Loan to include companies not organized as C-corporations and lowering the minimum numbers of full-time employees. More in the margins. Just create the right climate.
• McCollum says that Florida gets less than 1% of the national venture capital investment — horrible for the fourth-largest state. His solution is to spend more tax dollars in the form of seed money through the Florida Opportunity Fund. Venture capitalists will invest when they are sure it is the right company in the right place. They don't need tax dollars.
• Do a better job getting federal grants. Pure pabulum.
Despite its deficiencies, McCollum's program compares favorably to the plan of his Democratic opponent, Florida Chief Financial Officer Alex Sink. Sink is an accomplished banker, but her plan never touches most of these pressing issues and is particularly silent on property tax reform and on tort reform, the latter of which is politically understandable because the high-end ambulance chasers are huge Democrat donors.
McCollum's plan identifies almost every issue holding back Florida's recovery. But the lack of details makes one fearful that if elected, much of it may simply dissipate. It sounds a little too sound-bite oriented with too much emphasis on consensus.
Margaret Thatcher famously said that consensus is the death of leadership.
McCollum can do better. A lot better. He needs to.
Rod Thomson is the executive editor of the Gulf Coast Business Review, and can be reached at [email protected].
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