Florida Gov. Rick Scott Friday vetoed a bill that would have established a new tax-credit program designed to raise money for the Florida Hurricane Catastrophe Fund, and reduce its reliance on the bond market.
The Florida Insurance Premium Tax Pre-Payment Program was slipped into a budget bill in the last few days of the legislative session that ended March 9, escaping the traditional review, analysis and public comment.
“While the stated purpose of this program is to provide an additional funding mechanism for the Cat Fund, the language was not fully vetted through the committee process and emerged late in the budget conference,” Scott said in his veto message.
Under the tax-credit program, the state would have sold insurance companies up to $1.5 billion in tax credits for paying their premium taxes early. The funds from early payments would have been loaned to the Cat Fund as a form of liquidity to make reinsurance payments if the state is hit by a hurricane.
The bill raised all sorts of questions, including whether the tax-credit loans would be considered parity debt and how that would affect the Cat Fund’s $5 billion of outstanding bonds, according to the agency’s executive director, Jack Nicholson.
Nicholson, who opposed the measure, also said he did not know if the tax-credit program would affect the fund’s double-A category bond ratings.