The Sunshine Economy: The Legislative Session Ahead

Nov 10, 2015

There is a big gap between $635 million and $1.6 billion. Yet, those are the two estimates of how much extra money state lawmakers may have when they meet in January for their next legislative session. The lower estimate is the official figure from the Legislative Office of Economic and Demographic Research. The higher figure is from Gov. Rick Scott's budget director.

Last year's legislative session ended in chaos as Republicans in the Florida House and Senate fought over how to make up for missing federal money paying for health care for low income Floridians. In October, The Centers for Medicare and Medicaid Services put Florida on notice that the state will get 40 percent less money in the next fiscal year than this year for the Low Income Pool. And in June, 2017, the federal contribution will disappear. This drop in federal money required an extra session last spring for lawmakers to agree on a state budget before this fiscal year began. With health care as the largest single slice of the state budget, how lawmakers deal with the dwindling federal dollars will be the key financial issue lawmakers will face in January.

We spoke with a quartet of South Florida legislators about health care and other fiscal issues.

  • Health care

Sen Flores (R): The definition of insanity is doing the same thing over again and expecting a different result. In the short term, I guess we could say the [Florida] House won. But the long-term question is, “At what cost?” In the meantime, there are real people that really get sick that really need care. These are real human beings. And, as taxpayers, we pay for them.

Now knowing that Medicaid expansion or any alternative is off the table for this session, I think that we will start to look at what is the overall cost of health care. Is there a level for competition in health care?  Is there a way to expand usage of neighborhood clinics? As far as the funding side, I am an eternal optimist. I hope things don't get worse. But there is the realistic side of me that says we may be entering a point where the federal government is going to be sending some money down. That will put a Band-Aid on until next year.

So is it health care funding or is it public school funding? Is it health care funding or transportation funding?

Rep. Rodríguez (D): Whether some of us would like to be or not, we're not in the Supreme Court. We can't rewrite Obamacare. So the choice is how are we going to accept these monies [by expanding Medicaid] in a way that would be acceptable for Florida?

Rep. Moraitis (R): I think that issue was really decided in the last session. We did not accept [Medicaid] expansion but we did make sure that the uninsured Floridian's were taken care of … by continuing to provide the money for the hospitals that provide the charity care.

  • Tax Cuts

Gov. Scott wants to eliminate the state income tax for manufacturers and retailers.

  Gov. Rick Scott wants to cut taxes in Florida by $1 billion. The centerpiece of his proposal is to eliminate the state corporate income tax on manufacturers and retailers. He also wants to reduce the state tax on commercial leases from 6 percent to 5 percent, continue to make college textbooks exempt from sales taxes and continue two sales tax holidays for consumers: back to school and hurricane preparedness supplies.

Sen Flores (R): Is there something we could [do for tax cuts] that has more of bang for the buck? Something like eliminating sales tax on textbooks is something that makes a difference. These other things, I really think we need to take a much harsher look at them.

Sen. Sachs (D): I always applaud the governor's efforts at            cutting taxes. [It’s] going to result in millions of dollars that we're not going to get in the state, however. We have to make sure that we have enough money to pass around everybody. But I certainly applaud any tax cut we can afford.

Rep. Rodríguez (D): I think to the extent that we can diversify our economy in the direction of manufacturing, absolutely, I agree.  When you hear the governor and others talk about cutting the corporate income tax and other measures directed at the manufacturing sector, it's billed as a jobs program. The big question is,  does that work? The corporate income tax is relatively small. We're really a lean state. What are the kinds of things that manufacturing businesses need to come here? Is it infrastructure? Is it workforce training?

There are some pretty fundamental questions that I think need to be answered before we can design this. It needs to be more than just, “If you build it, they will come.”

Rep. Moraitis (R): I would support [eliminating corporate income tax for manufacturers]. I think that we need to diversify our economy. I think that's where he's going with that. We need to export more out of the state and [manufacturing] is one of the ways we're going to get there.

  • Use of Economic Incentives

The biggest job gains in the past 12 months have been in construction, health care and tourism.

  Florida’s job market -- at least according to the data -- is booming. The unemployment rate in September was just 5.2 percent. A quarter of a million new jobs were created in the past year. The biggest job gains have been in construction, health care and tourism.

That’s important to know when deciding if and how to spend money hoping to attract jobs to Florida. Gov. Rick Scott wants $250 million to seed incentive economic development packages -- money that could be used to entice companies to re-locate or expand here.

 

Sen. Sachs (D):  Does Florida need to spend $250 million to grow its job market? No.

Instead of just having a shotgun approach, we need to look at it in a surgical way. What kind of careers are we looking for here in the state of Florida? High tech. We should be the Silicon Valley of the Caribbean. Of Latin America. Our high tech should reach into Europe.

Rep. Rodríguez (D): I totally agree with the senator. It’s a surgical approach. Where have the programs we've already been investing in worked? And where have they not? I think this sort of across the board increasing spending can sometimes feel as just giving out more tax money to your friends.

One area we really need to figure out ways to support  in technology is largely through our university system. [We need to] look at what creates technology clusters and what creates long-term growth of local businesses and keeps them here.  One of things we see in Miami a lot of times is our tech businesses leave at a certain point. It's because they can't get access to capital or they can't get access to high-quality employees.  In several parts of Florida and in Miami,  we have a really vibrant tech and entrepreneurial sector. But it's missing components.

  • Amendment 1

Amendment 1 generated $740 million in its first year.

  Three-quarters of voters who voted in 2014 approved Amendment 1. It guarantees a third of the state's real estate documentary stamp tax revenues be spent on the environment. That amounted to $740 million this year, the first year of the amendment. About a quarter of it is going to operating expenses while about a tenth of it will actually buy land to preserve. Conservation groups behind Amendment 1 have sued the state over how the money was allocated. They argue not enough is being spent on buying and protecting land. Supporters of the spending strategy counter than the amendment is vague and broad in how the dollars can be spent.

Sen Flores (R): The issue that I have is that those who are criticizing the way that we spent the money are those who wrote the amendment.  

Sen. Sachs (D): This is such a great question for all of us around this table because the most environmentally sensitive area in this entire country is where we all represent  - Southeast Florida. The counties of Palm Beach, Broward, Miami-Dade and Monroe are experiencing climate change. When you’re on the ocean, nobody cares who caused it. They want to know what are they going to do to protect their property. The big reason voters had this referendum is because we failed as a Legislature to take care of our environment.

Rep. Rodríguez (D): At least 45 percent of what the Legislature appropriated last year is very clearly in violation of the amendment.

Rep. Moraitis (R): I would respectfully disagree that that dollars have to go to land acquisition. The amendment is very broad. If you read the text it does not say any particular amount of money or percentage of money has to be spent on a particular activity. It even includes things like recreation.

  • Redistricting

Two special legislative sessions to decide new political boundaries failed to generate new maps.

  Lawmakers have been called back to Tallahassee three times since the end of the regular session in May. Two of the special sessions were required when a state court ordered lawmakers to draw new maps -- first for Florida's 27 U.S. congressional districts and then for the 40 state Senate districts. Both map-writing sessions failed to generate a map the Florida House and Senate could agree upon. So it's up to the court to draw the political boundaries determining which districts voters live in. At the heart of the issue is the Fair Districts constitutional amendment. It was approved by voters in 2010.

Sen Flores (R): This was another one of those examples of a constitutional amendment gone awry. It was something that was done overly vague. The [Fair Districts Constitutional] Amendment says that a district shall neither favor nor disfavor an incumbent. That's just an example of confusion. It either does favor or doesn’t favor.

Sen. Sachs (D): The bottom line is we do not have a government that represents the demographics of Florida. We know that there are a couple hundred thousand more registered Democrats than Republicans. Yet the entire government of Florida is Republican.

Hopefully the courts will do a better job than we did.