Florida Gov. Rick Scott Presses for Business Tax Cuts

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BRADENTON, Fla. – As Florida's early legislative session opened this week, Gov. Rick Scott set the tone for his central initiative to offer businesses more than $1 billion in tax cuts and incentives.

Scott, a Republican, said in his address to a joint session of the Legislature Tuesday that the state must continue doing what has worked in the last five years of his administration to promote job growth by creating a new, $250 million incentive fund.

The $250 million would be used by Enterprise Florida, a public-private agency that recruits new business and expanding existing industry. Scott is the agency's board chairman.

"With record state revenues, we have the opportunity to diversify our economy and help our small businesses grow by cutting taxes by $1 billion," Scott said of his largest initiative. "If we put more money in their pockets, they will spend it on research, new equipment, and hiring to create more jobs."

Scott has already appeared before several pre-session committees reviewing his tax cut plan, part of his $79.3 billion proposed budget for fiscal 2017.

Top lawmakers have questioned whether Florida can prudently erase $750 million in annual recurring revenue from the state budget as Scott's tax cut plan requires.

Scott and the GOP-led Legislature have also disagreed about whether the anticipated budget surplus will be as large as the governor envisions.

Scott's debt financing plan is one of the smallest since he took office in 2011. His budget recommends $230.7 million of bonds for transportation right-of-way acquisition and bridge construction, and $161.7 million for Florida Turnpike construction projects.

Scott's budget proposal also would place $1.38 billion into the primary budget stabilization fund, although an additional $1.45 billion also is available from trust fund reserves, $1.78 billion from unspent general revenues, and $615 million from tobacco reserves for unexpected emergencies.

Some lawmakers have questioned Scott's plan to increase public education funding, which went unmentioned in his opening address, which centered solely on tax relief measures and incentives.

Scott proposed a $500 million increase for schools, although 80% of it relies on the Legislature ordering school districts to raise the revenue from local property taxes.

Another issue before lawmakers that Scott did not mention is the new compact he signed with the Seminole Tribe, which owns three Hard Rock Hotel & Casinos in the state as well as other locations offering high stakes bingo and Vegas-style slot machines.

Under the deal, the Seminole Tribe will pay Florida $3.1 billion over seven years in return for the right to add craps and roulette to its casinos.

The compact is subject to legislative approval, and lawmakers have objected to limits it imposes on certain counties where pari-mutuel sites would be allowed to offer Las Vegas-style slot machines.

"Issues such as the ratification of the new Seminole Compact will no doubt inspire great debate this year," said House Speaker Steve Crisafulli, R-Merritt Island.

While the 2016 session will require action on healthcare funding, and payments to hospitals that treat the poor, expanding Medicaid to cover more of the state's poor is not on the landscape. An effort to expand the state's insurance program stalled the 2015 session, delayed action on the state budget and required a special session.

Two bills affecting municipal utilities are back before the Legislature again this year, after previous attempts failed.

Bills have again been filed that would allow the Florida Governmental Utility Authority to finance projects with bonds by securitizing a charge on customers' water and wastewater bills.

Senate Bill 324 and House Bill 347 would implement the "Utility Cost Containment Bond Act" allowing certain local governmental entities to use the securitization authority.

FGUA, owner of water and wastewater systems in various part of the state, is the only intergovernmental authority that meets the criteria under the bill.

In addition to financing its own projects, FGUA would be allowed to issue bonds on behalf of other local government entities, and potentially earn fees for doing so.

HB 347 was scheduled to be heard by the Regulatory Affairs Committee on Thursday, the final review before heading to the floor for passage.

FGUA manager Robert Sheets and Citi vice president Kevin Dempsey have appeared in prior House committee sessions to support the measure.

At a House Finance and Tax Committee meeting in December, Brian Pitts, a trustee with the lobbying organization Justice 2 Jesus, questioned why FGUA should be the only entity allowed to perform financing in the state.

SB 324 has passed one committee, and has yet to be scheduled for consideration by two other committees.

For a second year in a row, bills have been filed to strengthen the financial duties of the Florida Municipal Power Agency, a nonprofit wholesale power agency owned by 31 municipal electric utilities in the state.

HB 579 and SB 840 would require that only elected officials can be members of the FMPA Board of Directors, which currently allows both elected and appointed board members.

The legislation also would require that FMPA issue detailed financial statements on each of its generation assets. FMPA supporters say such a measure would raise electric rates and borrowing costs.

HB 579 sponsor Rep. Debbie Mayfield, R-Vero Beach, told Energy & Utilities Subcommittee on Monday that her legislation promotes "transparency and accountability."

Mayfield also said the bill came about as a result of a state audit last year that questioned some of the FMPA's financial practices and "lack of financial disclosure to citizens."

"Since they are a government entity we created, we felt it was important to provide the financial information so taxpayers and ratepayers know where they stand financially," she said.

The committee meeting included a discussion about the fact that municipal utilities are members of FMPA, and often serve residents living outside city limits who don't have an avenue to complain about electric rates.

Speakers before the committee also addressed the fact that some FMPA members have attempted to withdraw from the agency but said they have been unable to obtain the exact cost for buying out their membership. For years, Vero Beach Utilities in Indian River County has attempted to opt out of the FMPA because investor-owned Florida Power & Light can offer cheaper electricity. Getting out has been complex because of Vero Beach's participation in bond-financed FMPA projects, among other issues.

Indian River County Attorney Dylan Reingold told the committee on Monday that he supports Mayfield's bill because some of FMPA's contracts are ambiguous and it has been difficult for withdrawing members to determine exact costs.

Dean Cannon, a former legislator who represented FMPA and the Florida Municipal Electric Association as a lobbyist, spoke about the bill's requirement for FMPA to provide a financial statement for each generation asset that must include a balance sheet that reflects associated assets and liabilities.

Such measures are not viable for generation assets, Cannon told the committee Monday, adding that the requirement would raise FMPA members' costs.

"FMPA is financially transparent," said Jim Swan, mayor of Kissimmee, where the city utility is a member of FMPA. "There's nothing hidden."

Swan told the committee the bill would hurt his city.

"Anything that costs us more to borrow money hurts us," he said.

Swan said FMPA's records, by Florida law, are open to the public and he urged the committee to vote the bill down.

Committee member Rep. Matt Hudson, R-Naples, said he felt the bill was filed with good intentions but "it seems to me at the end of the day it almost accomplishes nothing so my vote is no."

The Energy & Utilities Subcommittee passed the bill by a vote of 6-5. The remaining two House committee hearings have not been scheduled.

No hearings have been scheduled on the companion bill in the Senate.

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