2011 Pre-Session Legislative Update
Florida House and Senate members will convene in Tallahassee tomorrow for the state’s annual legislative session, which runs through May 6th. With our state under the leadership of a new Governor and several contentious matters already being discussed, it will be interesting to see how the session plays out. Among the numerous issues up for consideration over the next 60 days are proposals to reform Florida’s Medicaid system, overhaul the state’s pension program and implement landmark changes in how Florida’s teachers are evaluated and paid. Republican lawmakers have veto-proof majorities in both the House and Senate, but the two chambers have already revealed fundamental differences on several key issues. In addition, there is an interesting dynamic between legislative leadership and the executive branch, and lawmakers will have to decide how much, or how little, to consider of the recommendations made by Governor Rick Scott earlier this year.
Governor Scott was inaugurated in January and immediately honored his vow to change the way state programs are funded and managed, showing his supporters that “Let’s Get to Work” was more than just a campaign slogan. The Governor’s ultimate goals are to reduce government, cut taxes for citizens and businesses throughout the state and allow for more freedoms for Florida businesses to run efficiently and, as a result, create jobs. While most of the Republican-run State Legislature is supportive of Governor Scott’s conservative goals, his decisions to scrap high speed rail and sell state aircraft have created some tension among House and Senate lawmakers. The tension is mounting elsewhere as well, as proposed cuts to education and health care, and a possible overhaul of the state’s pension program, have state workers and others planning to protest the Governor’s recommendations. As lawmakers report to work tomorrow for the first day of session, union leaders, government workers and elder advocates plan to convene in Tallahassee for an “Awake the State” rally. In addition, Tea Party members are scheduled to go to Tallahassee in support of Governor Scott, particularly his high speed rail decision. Some may even push the Governor to scrap SunRail as well.
There will be much to debate over the next two months, as close to 1,800 bills have already been filed. Issues will likely be contentious and, as in recent years, balancing the state budget will be the biggest obstacle facing lawmakers this session.
STATE BUDGET
The state’s ongoing budget shortfall is currently estimated at nearly $3.6 billion, although final numbers have not yet been released. While many legislators are reluctant to reduce funding for state programs that have already seen numerous cuts over the past several years, it is clear that spending reductions will be inevitable. That fact was exemplified in early February, when new Florida Governor Rick Scott released his budget recommendations to the Legislature. While Governor Scott crafted a budget that was true to his conservative, Tea Party roots, it received very mixed reviews from House and Senate lawmakers.
The Governor’s self-proclaimed “Jobs Budget” of $69.5 billion, announced at a Tea Party meeting in Eustis, Florida, was not without controversy. His recommendations included cuts to the budget-breaking state Medicaid program, as well as cuts to education funding, including reductions in per-student spending. Governor Scott has also proposed eliminating more than 8,000 state jobs and sweeping a number of state trust funds. While most programs were cut significantly, the Governor’s proposal did include a large boost in economic development funding, and left transportation spending largely untouched, in an effort to spark job creation throughout the state. In addition, the Governor outlined a proposed budget for 2012-13 that will be even smaller than his current recommendations.
State economists recently announced that final revenue estimates for the coming year will not be released until March 18th. Lawmakers will be unable to begin crafting their respective budgets until after that time.
HEALTH CARE
One of the biggest issues this session will be the legislative overhaul of the state’s Medicaid program. Lawmakers are continuing efforts that began last year, with Senator Joe Negron (R-Palm City), chair of the Senate Health and Human Services Appropriations Subcommittee, leading the charge. With Medicaid costing the state $20 billion last year, and the price expected to increase by more than $2 billion this year, lawmakers are determined to find ways to lower the costs of the program. The ultimate goal expressed by members in both the House and Senate is to move more of the state’s nearly 3 million Medicaid recipients into managed-care. The move would expand a pilot project implemented in 2006 in five Florida counties (Baker, Broward, Clay, Duval and Nassau). Lawmakers attempted to expand the project last year, but were unable to reach an agreement.
Senator Negron’s committee proposal, which was released last month, places the majority of the state’s recipients into HMO-style health plans within a newly-formed 19 region system. The Senate plan also increases reimbursement rates for providers caring for patients receiving Medicaid benefits. In addition, the Senate bill forbids Medicaid-eligible Floridians who are able to receive employer-provided health benefits from receiving Medicaid benefits. The plan does, however, allow those Floridians to use Medicaid financial assistance to pay for the services provided by their employers. The most controversial component of the Senate plan involves participation by the federal government. Florida must request a federal waiver to implement the new plan, if passed. If this waiver is not granted, Senator Negron proposes that Florida discontinue the state/federal partnership and forego the federal funding match currently provided. Many lawmakers have expressed considerable apprehension about giving up the federal portion of funding for the program.
The House proposal, which was just released today, also moves Florida’s Medicaid recipients into managed-care plans, but differs greatly from the Senate plan. The House plan takes a more gradual approach and includes no provisions to forego the federal portion of the program. In addition, while the Senate proposal creates a 19-region system, the House plan splits the state into only seven regions. Going forward, both chambers will have to work to reach a compromise on this critical issue.
Another legislative priority for this session will be to reorganize the Florida Department of Health (DOH) – a move highly supported by Governor Scott. Criticism of the Department has been unwavering in recent years. As a result, DOH staff released a proposal last week to drastically cut and reorganize operations. The plan includes eliminating more than 1,500 jobs, consolidating a number of divisions within DOH and placing many duties currently carried out by DOH under the purview of other state agencies. In addition, the plan drops the requirement that the state’s health secretary be a physician.
Lawmakers are also considering a repeal of the state prescription drug tracking database, created two years ago to monitor the distribution and use of prescribed medication and help in the state’s fight against prescription drug abuse. The Florida Department of Law Enforcement (FDLE) reports that there are more than 1,600 “pill mills” in the state. Despite support from many officials statewide, including Attorney General Pam Bondi, Governor Scott called for a repeal of the database. This contentious issue will likely be a fight between the House and Senate this session, with Senate President Mike Haridopolos (R-Melbourne) supporting the database but House Speaker Dean Cannon (R-Winter Park) calling for a repeal. The House plan also takes the issue a step further, calling for a ban on doctors selling drugs from their offices. Speaker Cannon argues that the problem originates in doctor’s offices and should be addressed there. Florida doctors and other members of the state’s medical establishment will undoubtedly oppose the House plan.
EDUCATION
Lawmakers this year are again considering a measure to base teacher pay on student performance. The proposal was introduced last year in SB 6, sponsored by Senator John Thrasher (R-Jacksonville). The bill, which passed through both chambers of the Legislature, was vetoed in a controversial move by former Governor Charlie Crist. This year’s legislation, sponsored by Senator Steve Wise (R-Jacksonville), chair of the Senate PreK-12 Education Committee, is more moderate than last year’s proposal and is intended to implement “Race to the Top” standards. This year’s proposal would grandfather in current teacher pay plans, but set up new merit-based pay for all teachers hired after July 1, 2014. The plan would also change how teachers are evaluated and would allow the evaluation formula to include consideration of student attendance, disciplinary records, disabilities and English proficiency.
When it comes to education, budget issues will be one of the biggest difficulties for lawmakers this session. Governor Scott’s budget proposal cuts education funding by more than $3 billion and decreases per-student spending by $298 to $6,600 per student. The Governor has stated that the decrease is due to the lack of federal stimulus funds, which had been used in recent years to plug holes in the state budget, but ran out last year. His proposal also cuts higher education and allocates no funding for the New Florida initiative, which calls for a boost in funding for Florida’s 11 public universities.
While House and Senate members will likely make some reductions in education spending, their cuts may not be as drastic as those proposed by Governor Scott.
ENERGY AND ENVIRONMENT
At this time, the energy priorities for this session remain relatively unclear. There have been numerous bills filed to promote clean energy standards and renewable development over the past few years, but this has proved to be a difficult issue for lawmakers to agree on and, as a result, most bills have not made it through the legislative process. Governor Scott has expressed doubts about the need for renewable resources, making it more difficult to determine the future of renewable energy in Florida. In addition, the Governor’s budget recommendations include the elimination of the Florida Energy & Climate Commission, a volunteer board created under Governor Crist.
Last month, Senator Mike Bennett (R-Bradenton) filed a renewable energy bill backed by utilities and similar to legislation filed last year, which passed through the House but died in the Senate. The “cost recovery” legislation would allow private utilities to charge customers for running various forms of renewable power, including solar and biomass, and would enable utilities to boost renewable activities. Senator Bennett has also introduced legislation creating a fund for energy rebates and allowing independent energy producers to sell renewable power at rates equal to those charged by utilities.
TRANSPORTATION
Last month Governor Scott made a very controversial decision to turn down $2.4 billion from the federal government for the creation of a heavily-debated high speed rail system between Tampa and Orlando. The Governor’s actions were due to concerns that the state would end up footing too much of the bill. High speed rail supporters were dismayed by the decision to shut down a project with the potential to create thousands of jobs and provide much-needed relief for commuters traveling on I-4 between Tampa and Orlando.
The rejection of the funds led two state lawmakers, Senators Thad Altman (R-Viera) and Arthenia Joyner (D-Tampa), to take the issue to the Florida Supreme Court. The Senators argued that the Governor could not refuse funds to build the train, as the Legislature had passed language providing for the creation of the project back in 2009. Their request was denied by the Supreme Court. U.S. Transportation Secretary Ray LaHood has since announced that the funds will be distributed elsewhere.
In another landmark transportation decision, Governor Scott announced late last week that the state will fully fund plans for the Port of Miami to move forward with a dredging project to allow larger ships passing through the Panama Canal to enter the Port. The project will allow for more international trade and will provide a significant boost in economic development, with current estimates predicting the creation of about 33,000 jobs in South Florida. The Florida Department of Transportation (FDOT) will amend its work plan to include a total of $77 million for the project.
There are several bills filed this session by Representative Lake Ray (R-Jacksonville) in the House and Senator Jeremy Ring (D-Margate) in the Senate to boost funding and incentives for Florida’s 14 public seaports.
BUSINESS AND ECONOMIC DEVELOPMENT
House and Senate lawmakers have spent the last several weeks working on legislation to amend Florida’s Unemployment Compensation system. The ultimate goal of the legislation is to create jobs and ease the burden on Florida companies that have seen steadily rising rates over the past several years due to Florida’s record unemployment numbers. The House and Senate have introduced their respective plans, both of which aim to encourage benefit recipients to look for jobs, and reduce fraud by those who should not be collecting unemployment. The business-friendly legislation reduces taxes on employers and aims to encourage new businesses to come to Florida and provide jobs. Lawmakers are also considering a measure to phase out the Corporate Income Tax, which would provide relief to large companies doing business in Florida.
Governor Scott’s budget recommendations included measures to significantly increase funding for economic development projects in Florida and provide for cost-saving measures, including consolidation of all economic development agencies into one entity. The Senate is considering this issue and has proposed a plan to create a new “Jobs and Economic Opportunity Office,” which would include the Office of Tourism, Trade and Economic Development (OTTED), Enterprise Florida, Visit Florida and the Florida Sports Foundation, as well as several other offices.
PENSION REFORM
Last month Governor Scott rolled out a plan to overhaul the state’s pension system – a move analysts say could save the state more than $1 billion in the first year alone. The Governor’s controversial proposal would require public employees to contribute five percent to their pensions and all new hires to enroll in investment plans. In addition, the Governor’s plan would close the state’s Deferred Retirement Option Program (DROP) to new participants, effective in July. Also included in the Governor’s plan was a proposal to end the annual three percent cost of living adjustment on retirement benefits on service after July 1st, as well as a proposal to cut the accrual rate for special risk class members from three percent to two percent – a move that would greatly affect police and firefighters.
Senator Jeremy Ring introduced two retirement bills last month which would require new employees in both the Florida Retirement System (FRS) and local pension plans to join 401(k)-type plans. Senator Ring’s legislation also based benefits on base salary and did not consider overtime or other compensation. After initial introduction, the Senate legislation was amended to give local governments more flexibility with offering traditional pension plans and increase the salary base upon which pensions are calculated. An amendment sponsored by Senator Jack Latvala (R-St. Petersburg) would allow up to 300 hours of overtime to be calculated into pension benefits. The updated legislation also requires most government workers, police, firefighters and other emergency responders to contribute two percent toward their pensions.
LOCAL GOVERNMENT ISSUES
Lawmakers are considering several bills this session to implement provisions in 2009’s growth management bill, SB 360, also known as the “Community Renewal Act.” The landmark legislation made numerous changes to the local growth planning process and allowed for additional growth in densely populated areas. The legislation faced legal challenges immediately after passage and its provisions have not yet been in effect in Florida. House and Senate members have filed several bills this session to enact certain less controversial provisions of the original bill. However, some members have expressed an interest in making changes to the 2009 language. It now looks like both the House and Senate will plan major rewrites of Florida’s current growth management laws. Those plans are currently being formulated in each chamber.
Lawmakers are also considering a recommendation by Governor Scott to abolish the Department of Community Affairs and move growth and planning responsibilities to the Department of Environmental Protection.