State House and Senate members convene in Tallahassee today for Florida’s annual legislative session, which runs through April 30th. The list of priority issues to be addressed is extensive, with topics ranging from health care reform to economic development incentives for Florida businesses. As in recent years, the 2010 session will be dominated by one major issue: the economy. Lawmakers will be faced with some difficult decisions with regard to Florida’s budget, which is the only bill members are required to pass. While recent reports indicate some growth in Florida for the first time in four years, it will not be enough to make any significant difference for the coming budget year. With record unemployment at nearly 12 percent and a continued decline in tax receipts, Florida essentially remains a “zero growth” state.
With 2010 being an election year, politics will also dominate this session. For the first time in more than 120 years, all four Cabinet seats will be open and in play. In addition, all 120 seats in the House of Representatives and 20 Senate seats are up for reelection. With Governor Charlie Crist seeking the United States Senate seat vacated by Senator Mel Martinez, he becomes a lame duck Governor, giving the legislature a stronger hand in the budget process this session. The Governor’s optimistic budget, which was recently released, is already being viewed with a great deal of skepticism by the legislature.
The budget will be the overriding issue facing state House and Senate members this year. Over the last three years, lawmakers have cut a total of nearly $7 billion from the state budget and, with a projected deficit of nearly $3.3 billion for Fiscal Year 2010-2011, cuts are almost guaranteed this session as well. The two biggest items in the state budget are health care and education. State Medicaid costs are rising at a rapid rate, and school districts continue struggling with deficits due to declining property tax rolls. Lawmakers will be faced with finding ways to balance the budget without cutting programs in these vital areas – a next to impossible task.
In late January, Governor Crist released his proposed $69.2 billion budget for the coming year. The Governor and legislators are already far apart on this issue, with many House and Senate members criticizing Governor Crist’s plan for being too optimistic and relying on uncertain federal funds. The Governor’s budget includes a $2.9 billion (approximately 4 percent) increase in spending. His proposal also includes nearly $1 billion for Medicaid programs. These funds are expected to be granted by the federal government, but have not yet been approved by Congress. In addition, the plan includes $433 million from an agreement with the Seminole Tribe of Florida, which has already been rejected by the House, as well as an increase in per-student spending in the state’s K-12 schools.
Governor Crist’s plan relies on $584 million in state trust fund sweeps – particularly the Lawton Chiles Endowment and the Affordable Housing Trust Fund. He has also set aside around $250 million in reserve funds, which many lawmakers, including House Speaker Larry Cretul (R-Ocala), have criticized for being far too low. The legislature is expected to set aside much more for next year when lawmakers have to find ways to replace stimulus funds, which are set to run out at that time.
It is not yet clear exactly how lawmakers plan to address the state budget shortfall, but both House and Senate leadership have expressed plans for a conservative “cut and save” budget, with no new or increased taxes or fees. This means many programs seen as “non-essential” will again be on the chopping block. However, after four consecutive years of spending cuts, lawmakers will have to find creative ways to save. Members have already indicated that potential furloughs and layoffs of state employees, as well as possible cuts in wages and benefits, will be considered.
Health care is currently the biggest item in the state budget. Lawmakers predict that over the next four years, Medicaid programs will grow from 26 to 31 percent of the budget.
Under the 2009 American Recovery and Reinvestment Act (ARRA), the federal government agreed to pay a bigger portion of Florida’s Medicaid costs. State lawmakers are currently awaiting approval of an extension of this provision, which would provide $1.2 billion for these programs in Florida for the coming year.
This year, the legislature is gearing up to address the state’s growing Medicaid problem, with two proposals currently under review. The first proposal includes a statewide expansion of Health Maintenance Organizations (HMO). The second proposal is a medical home model, which is a provider-centered approach where patients have a primary care physician managing their care.
Some state lawmakers are also preparing for the possible passage of federal legislation to reform the nation’s health care system. Florida Attorney General Bill McCollum announced last month that he is prepared to sue the federal government if it passes health care reform legislation that includes an individual state mandate. General McCollum and other conservative lawmakers have questioned the constitutionality of the federal government issuing such a mandate.
Republican lawmakers continue their efforts this year to change the class-size amendment passed by Florida voters in 2002. Schools will be required to implement the class-size limit based on individual classroom numbers instead of school-wide averages this fall. Unfortunately, given the tough constraints many Florida school districts are already facing, most schools are unprepared and unable to implement this new aspect of the law. Representative Will Weatherford (R-Wesley Chapel) and Senator Don Gaetz (R-Niceville) have sponsored legislation proposing a constitutional amendment to give schools more flexibility with regard to class-size. The measure must receive a three-fifths vote by the legislature to be placed on the 2010 ballot.
Florida has applied for a $700 million federal grant from the U.S. Department of Education through its Race to the Top Program. The program is designed to “revolutionize” public schools across the nation by instituting new standards, assessments and teaching methods in schools. While there has not yet been any official word, Governor Crist has indicated that he is optimistic about Florida receiving the grant.
Despite calls for more state investment in Florida’s university system, the state’s colleges and universities may face cuts this year. Governor Crist’s proposed budget calls for more than $100 million in new funding for Florida’s public universities and nearly $70 million for the state’s community colleges. This investment in higher education is designed to address Florida’s new economy and the economic development benefits created by a college degree coupled with university research and development.
Energy & Environment
State House Republicans are again pushing a measure to expand oil-exploration off Florida’s shores. This measure, led by House Speaker-designate Dean Cannon (R-Winter Park) would lift an existing ban and allow for drilling 3 to 10 miles off of Florida’s coast. The measure came closer than ever to passing during the 2009 legislative session, but ultimately, there was not enough support for the issue in the Senate. It looks like the bill could face the same problem this year, with many Senate members skeptical of the measure in an election year. In addition, environmentalists have been outspoken about potential oil spills and other dangers expanded drilling would pose to the waters surrounding the state. Other critics remain apprehensive about the lengthy amount of time it could take for the state to see any revenues coming in from the exploration.
The proposed federal water quality standards issued by the U.S. Environmental Protection Agency for Florida’s lakes and rivers will be a significant issue in the coming months. Critics of the proposed changes, including the Florida Department of Environmental Protection and Florida business community, argue that the new standards would be too difficult for Florida to meet. As a result, lawmakers are calling for an extension of the EPA’s comment period to address the issue. Meanwhile, Senator Lee Constantine (R-Altamonte Springs), who chairs the Senate Committee on Inland Waters, will push for approval of legislation protecting the state’s springs. Senator Constantine hopes this move may lead the EPA to modify its proposed pollution standards.
Senator Mike Fasano (R-New Port Richey) has filed legislation to increase regulation of the Florida Public Service Commission (PSC). The bill would require communications between PSC Commissioners and regulated utilities to be open to the public. The legislation is in response to fallout after reports last year revealed controversial contact between PSC Commissioners and utility representatives. The measure would also ban former Commissioners and staff from lobbying the state executive or legislative branches for four years after departing the PSC.
The Florida Forever program is up for discussion again this legislative session. Last year the program was put on hold indefinitely after lawmakers were unable to identify funding for it in the state budget. Governor Crist, Attorney General McCollum and Chief Financial Officer Alex Sink have all urged the legislature to include funding for the program this year.
In January, President Obama announced the recipients of $8 billion in federal stimulus funds for high speed rail projects. Florida was one of the biggest winners, securing $1.25 billion for the proposed bullet train linking Tampa and Orlando. A Florida Statewide Rail Commission will be established to assist the state in creating a high speed and commuter rail network.
Representative Lake Ray (R-Jacksonville) and Senator Jeremy Ring (D-Margate) have filed legislation for the 2010 session to revamp Florida’s ports system and increase state investment in Florida’s 14 public seaports. The members are seeking up to $500 million for port improvements, which would in turn create jobs and boost Florida’s economy. Under the proposed legislation, the funding would be provided through an incentive offered to insurance companies where companies would voluntarily pay, in advance, the state taxes assessed on the value of their premiums. In return, the state would give discounts to the insurance companies on their taxes.
Business & Economic Development
Florida business leaders are currently urging lawmakers to change the state’s unemployment compensation tax law. Companies saw the tax increase last June when the state’s Unemployment Compensation Trust Fund dropped below four percent of taxable payroll due to rising unemployment claims throughout the state. Governor Crist and the leadership of the House and Senate have promised legislation delaying the increase this session. If lawmakers fail to act, the tax paid by many businesses could increase from $8.40 per employee to $100.30 per employee.
The Select Committee on Florida’s Economy is pushing “Jobs for Florida” legislation, which would alter economic development incentive and regulatory programs in Florida. The bill includes tax credits and incentives for various industries, including space and entertainment, and aims to boost Florida’s economy and, most importantly, create jobs. In addition, the legislation would promote business interests by making changes to ease the state’s permitting process.
Other Important Issues
A measure will be introduced again this year to allow property insurance companies in Florida to charge “deregulated” rates, or rates above those set by the state. The measure passed during the 2009 session, but was ultimately vetoed by Governor Crist.
There are currently six proposed constitutional amendments for Florida citizens to vote on this fall. The amendments address public campaign finance laws, property taxes, the controversial Hometown Democracy issue and the issue of congressional redistricting.
The first proposed amendment will allow voters to decide whether or not public campaign financing should be repealed. Another amendment would provide an additional homestead property exemption for members of the United States military or military reserves who received an exemption, but were deployed during the time of receipt. In addition, voters will decide on a proposal to limit the maximum annual increase in the assessed value of non-homestead property to five percent.
Supporters of the Hometown Democracy issue secured enough signatures to place an amendment on the 2010 ballot that would require all changes to local comprehensive growth plans to be approved by local voters. This issue is very controversial, with businesses and local governments arguing that it would make even the smallest changes in growth nearly impossible to complete. The cost of this amendment, if passed, could be devastating both from a financial and a “no growth” perspective. The final two amendments are regarding the redrawing of legislative and congressional districts. Redistricting will occur after the 2010 Census.
Ultimately, because of the dismal budget outlook and the fact that this is an election year, we can expect a great deal of political jockeying and, in the end, possibly little in the way of major legislation this session.