2011 Mid-Session Legislative Update
With a newly elected Governor and Cabinet, as well as numerous freshman House and Senate members, a new and interesting dynamic is forming in Tallahassee. Our state is facing many difficulties due to continued economic decline at the state, national and global levels. It will be up to these leaders to come together and create policies to address these difficult matters while also working to ensure a successful future for our state.
Last week marked the mid-point of the 2011 legislative session. As far as issues go, this has been one of the busiest sessions in recent memory. Over the past few weeks, lawmakers have worked to address a number of important matters, such as reforming Florida’s Medicaid program and overhauling the state’s retirement system. The state budget process is moving more quickly than usual, with budget proposals already approved by each chamber, and House and Senate members preparing for Legislative Budget Conference this week.
While issues are being addressed quickly, this session remains a contentious one. State officials are facing many critical and difficult issues and there are significant differences of opinion between the Governor and Legislature, as well as between legislative leadership and House and Senate members. Governor Scott’s strict, conservative stance on the state budget, health care and retirement has not been received well by some lawmakers, who are conflicted on how to address these issues while fulfilling their duty of balancing the state budget. With the state currently facing a budget shortfall of nearly $3.8 billion, this continues to be the most difficult task faced by Florida lawmakers.
Last week the state House and Senate each passed their respective budget proposals for Fiscal Year 2011-12, which begins July 1st. There is a $3.3 billion difference between the plans, and while both proposals make deep cuts in an effort to tackle the state’s budget shortfall, the chambers are divided on funding for a number of key programs, including retirement, education and health care.
The House’s $66.5 billion budget was passed by a vote of 78-39, mainly along party lines. The Senate budget was approved by 33-6 vote, with a number of Democrats supporting the proposal. While members claim that their respective plans are without any tax increases for Florida’s citizens, both chambers will require government workers throughout the state to contribute to their retirement. The House and Senate plans differ greatly, however, and will require members to compromise on several key provisions pertaining to the state’s retirement system.
The proposed budget plans also differ on health care spending, with the Senate allocating about $800 million less for health and human services programs than the House. The Senate plan also cuts Medicaid rates for hospitals by 10 percent, while the House version cuts the same rates by seven percent. The Senate plan also includes a controversial cut of $230 million to the state’s Medically Needy Program, which was left untouched by the House. Other differences between the two plans include a Senate proposal to reduce state government health benefits and a House proposal to raid the State Transportation Trust Fund. These are among many issues that will be resolved during the budget conference process. Neither plan includes the tax cuts proposed by Governor Scott prior to session, although House Speaker Dean Cannon (R-Winter Park) has not completely ruled them out.
One of the biggest issues being addressed by lawmakers this session is a move to overhaul the state’s complicated and expensive Medicaid program, which is expected to consume nearly 30 percent of the state’s budget for the coming fiscal year. The House and Senate have each crafted different proposals, but both will implement major changes to the current system and move the state’s three million program recipients into a managed-care system.
The House plan, which is outlined in two bills, would divide the state into eight regions and would gradually move beneficiaries into managed-care plans over a five-year period. In addition, the House proposal would eventually include people with developmental disabilities into the managed-care program – a provision not included in the Senate plan. The two House bills would create three separate programs which would include all recipients, including those in residential and long-term care and those with developmental disabilities. The proposal passed through the chamber by a vote of 80-38. It will now be sent to the Senate for consideration. The Senate’s Medicaid legislation is still moving through the committee process. SB 1972, sponsored by Senator Joe Negron, chair of the Senate Budget Subcommittee on Health and Human Services Appropriations, would separate recipients into a more integrated, 19-region system. The bill will be heard by the Senate Budget Committee this week.
Another important and controversial health care issue being addressed by lawmakers this session is regarding the state’s Prescription Drug Monitoring Program. In the weeks leading up to session, Governor Scott proposed repealing the measure to create a prescription drug database in Florida. This move was supported by House leadership, with members introducing a plan to repeal the database and, taking the issue a step further, ban physicians from dispensing certain prescription drugs. In recent weeks, House leaders have also passed language to regulate what kind of pharmacies can dispense these drugs. The Senate rejects both ideas of repealing the database and banning physician dispensing. This will be a contentious issue between the two chambers in the coming weeks.
While lawmakers battle it out, Governor Scott continues to focus on the state’s “pill mill” problem, with his announcement late last month of a statewide law enforcement effort to combat the issue. The Governor’s plan divides the state into seven regions and involves coordination between local law enforcement and several state agencies to crack down on the illegal distribution of prescription drug pain medications.
Lawmakers kicked off the session with the reintroduction of an education measure to base teacher pay on student performance. The proposal, which is similar to legislation passed last year but vetoed by Governor Crist, sets up a new merit-based pay system for all teachers hired after July 1, 2014 and is intended to implement “Race to the Top” standards. The bill passed early, with a lot of support from members in both the House and Senate. Governor Scott then signed the legislation into law on March 17th. Lawmakers are also focusing on several other education areas in an effort to comply with Race to the Top standards, including digital learning. There are currently several proposals to increase digital learning in Florida’s public schools and allow for more virtual options for Florida’s students. Lawmakers are also focused this session on charter schools. This measure is supported by Governor Scott and would allow charter schools to expand enrollment more easily and add grade levels.
On the higher education front, the House has proposed legislation regarding the Florida College System Institution. The proposal would ban the award of tenure, multi-year contracts and continuing contracts and require colleges to implement an annual contract system for all new hires. In the Senate, there is legislation requiring the Higher Education Coordinating Council to develop a comprehensive plan for Florida’s higher education institutions, in an effort to increase access and efficiency going forward.
Energy and Environment
This session’s key energy legislation pertains to utilities and the recovery of renewable energy costs. Senate lawmakers have proposed legislation aiming to allow Investor-Owned Utilities (IOU) to recover the costs of renewable energy projects. This would allow IOUs to build renewable energy facilities, convert existing fossil fuel facilities or purchase renewable energy. The legislation provides that at least 25 percent of the renewable energy must be from a source other than solar. The bill also establishes a process for the Public Service Commission to create a state energy resources plan, which will include renewable energy. In addition, the legislation abolishes the Florida Energy and Climate Commission, created under Governor Charlie Crist, and places all of its powers and duties within the Florida Energy Office. There is similar legislation in the House to streamline Florida’s energy policy and allow for cost recovery for Florida’s IOUs.
Lawmakers also continue to focus on legislation regarding the U.S. Environmental Protection Agency’s (EPA) final ruling on numeric nutrient criteria for bodies of water in Florida. There is legislation moving through the House which would direct the Florida Department of Environmental Protection (DEP) to publish a Notice of Proposed Rulemaking by an effective date to revise the dissolved oxygen criteria applicable to Florida waterbodies to take into account the variability occurring in nature. The bill also revises the current classification of Florida’s surface waters and splits the system into two classifications: Human Use and Aquatic Use.
Transportation and Economic Development
There are several bills filed this session affecting transportation generally. In the Senate, there is legislation giving the Florida Statewide Passenger Rail Commission the primary and exclusive authority to monitor certain designated functions related to passenger rails systems. In addition, the legislation repeals the Statewide Intermodal Transportation Advisory Council (SITAC) and establishes Strategic Intermodal System Highway corridors. On the House side, the Transportation proposal revises the powers and duties of the Florida Department of Transportation (FDOT) relating to jurisdictional responsibility and designating facilities, and contains many of the same provisions in the Senate proposal.
In addition, the Senate Budget Committee’s transportation package includes language making significant changes to Florida’s expressway authorities. The legislation, which passed through the Senate, transfers the governance of the Tampa-Hillsborough County Expressway Authority, Orlando-Orange County Expressway Authority and Mid-Bay Bridge Authority to the Florida Turnpike Enterprise. There is currently no similar language in the House, and the issue will be addressed during budget conference this week.
Governor Scott has worked since his inauguration to tout the economic aspects of Florida’s seaports and stress the need for additional port funding from the state. House and Senate lawmakers also have a heightened focus on ports this session, with several bills filed in both chambers pertaining to port improvement and development. With the Panama Canal expansion looming, the Legislature and Governor fully understand that Florida has to be prepared or will be left behind.
One of the challenges facing Florida, unlike other states such as Georgia, is that Florida has 14 ports, all of which are competing for the same limited number of dollars. Governor Scott and many legislators have now recognized that each port plays a different role in Florida’s economic engine and that their needs and funding requirements are different as well. As a result, there is a measure in the Senate to move the port funding process, currently operated by the Florida Seaport Transportation and Economic Development (FSTED) Council, to FDOT. This provision is included in the Senate Transportation Budget package, which passed and was sent to the House for consideration. The two chambers are currently working out their differences on this issue.
Most of the numerous seaport bills, both funding and non-funding related, have been filed by Representative Lake Ray (R-Jacksonville) in the House and Senator Jeremy Ring (D-Margate) in the Senate. One bill filed by Representative Ray requires the FSTED Council to annually develop a port project priority list and each port to develop a master plan. The bill also eases certain DEP permitting requirements. Senator Ring’s similar legislation will be heard by the Budget Committee before going to the Senate floor for a full vote. Both of these bills aim to boost financing for Florida’s 14 public seaports and ease difficult permitting provisions, which will make Florida ports more competitive globally.
There are numerous bills pertaining to economic development this session, including legislation creating the state’s first Florida Infrastructure Fund Partnership, which institutes a tax credit program and encourages private investment in state infrastructure projects. Lawmakers are also focused on the state’s Qualified Target Industry incentive program, and are working to revise program criteria to enhance incentives for international trade and logistics industries in Florida.
House leaders met last week to consider a governmental reorganization proposal, which would transfer several state government agencies to a newly formed state Office of Economic Opportunity. This move was outlined as a priority by Governor Scott in his February recommendations to lawmakers. The new agency would be within the Executive Office of the Governor and would oversee a number of duties currently being carried out by other state agencies. The proposal would also move a number of public and private development entities currently within the Governor’s Office of Tourism, Trade and Economic Development (OTTED) to the Office of Economic Opportunity. The Senate has a reorganization bill that contains many similar provisions, but is more extensive.
Going into this session, pension reform was and remains a top priority for Governor Scott, Senate President Haridopolos and Speaker Cannon. The extent to which pensions and retirement provisions should be reformed has been a very contentious issue this session. Proposed legislation from both chambers has been discussed and debated over the past few weeks in numerous committees and hearings, generating an overwhelming amount of public appearance and testimony. For decades, Florida’s retirement and pension plans have been funded by taxpayers. However, due to the state’s dismal economy and continued budget shortfall, both the House and Senate introduced plans to overhaul this practice and require employees to contribute to their own plans. Last week, the House and Senate passed their respective plans, HB 1405 (Workman) and SB 2100 (Budget Committee) with hundreds of union and government workers at the capitol to protest the changes proposed by both chambers.
The House plan is more simplistic and requires state workers, including teachers, firefighters, police and other state government employees, to contribute three percent of their wages to their retirement plans. This contribution applies to employees of all classes of the Florida Retirement System (FRS) or 401(k) Investment Plan. The House plan would also close the Deferred Retirement Option Program (DROP) to new employees, effective July 1, 2011. Furthermore, the proposal includes a controversial provision to increase the years of service requirement and the retirement age for administrative and special risk class employees enrolled after July 1, 2011.
The Senate proposal takes a tiered approach and provides for employee contributions based on income. Under the Senate plan, employees making up to $25,000 would contribute two percent, those making between $25,000 and $50,000 would contribute four percent and those making greater than $50,000 annually would contribute six percent. This would apply to both defined investment and defined contribution plans. The Senate plan also preserves the DROP program until July 1, 2016.
Considering that the House and Senate have offered two very different proposals, it is nearly impossible to determine what provisions will stand after the conference process between the two chambers is completed. Interestingly enough, neither the House nor the Senate plans were nearly as aggressive as Governor Scott’s proposal, which called for five percent, across-the-board contributions from all state employees and compulsory participation in a 401k-style investment plan. If Governor Scott perceives the final version of the reform legislation to be too meager in its approach, he may refuse to sign any pension reform into law until the legislature sends him a bill that more-closely reflects his proposal.
House leaders have placed a significant amount of focus this session on deregulation, with the chamber passing two bills reducing state oversight of more than 20 professions. One proposal eliminates all state licensing and regulation of 14 professions, including auctioneers, movers, auto repair shops, dance and health studios, talent agents and telemarketers. The second proposal reduces regulations for nine other professions, including asbestos, building and electrical contractors, home inspectors and mold assessors. There is much support for these business-friendly bills, and proponents claim that the changes will encourage investment and create jobs throughout the state.
The Senate currently does not have a deregulation bill. Senate leaders have expressed a willingness to negotiate with the House on this issue, but Senate President Haridopolos has expressed some caution about taking the issue too far. The House bills have been sent to the Senate for consideration.
House and Senate members began working early this session on legislation to amend Florida’s Unemployment Compensation system. The House passed a bill in early March to encourage state benefit recipients to look for jobs, and reduce fraud by those who should not be collecting unemployment. The legislation also reduces taxes for employers and encourages new businesses to come to Florida. The proposal passed through the House and was sent over to the Senate, where it awaits consideration.
With a budget battle looming, there is still much work to do during the second half of session. Once budget allocations are released, lawmakers can begin the conferencing process. After a final 2011-12 appropriations act is agreed upon and passed by both chambers, it will be sent to Governor Scott for his approval. There is currently much uncertainty regarding the Governor’s potential reaction to the budget passed by the legislature and how the two branches will come to terms on their differences.
Lawmakers are also still working on numerous substantive bills and will stay busy throughout the remainder of session, which ends on Friday, May 6th.