Economic development for Florida in 2012

When Florida’s Governor Rick Scott came through St Augustine and Palm Coast earlier this year, he spoke to area business leaders and elected officials about his agenda — calling for the merger of major agencies, streamlined rules and regulations, and more money for incentives to attract companies to move to Florida.

The Legislature gave him only part of what he wanted; but, for the 2012 legislative session, he’s making similar requests.

Lawmakers in 2011 agreed to merge parts of the Department of Community Affairs and the Agency for Workforce Innovation with the Office of Tourism Trade and Economic Development to create a new agency, the Department of Economic Opportunity.

Legislators also gave the governor $93 million for tax breaks and other incentives to offer companies considering a move to Florida; but they added more “strings” than Scott would have liked. For 2012, Scott is calling for $230 million — with fewer restrictions on how he can use the money to attract businesses.

The request comes at a time when the efficacy of the state’s economic development efforts is being questioned. Recent reports in the Orlando Sentinel and other news outlets revealed that many of the companies offered incentive packages during the past 15 years have not met job creation requirements, and have not received the tax breaks or other incentives.

There were also significant changes to the unemployment compensation system in 2011, including requiring claimants to apply online and undergo a skills test. The overall number of weeks of state benefits was cut from 26 weeks to 23 weeks. Scott wants to change the system further in 2012, renaming it the “re-employment assistance” program, requiring training for low-skilled workers and extending the period to recoup money lost through fraud.

The question of whether a sales tax should be imposed on Internet sales could also be addressed in 2012. Lawmakers have already filed bills, and the Senate Budget Subcommittee on Finance and Tax is drafting a bill that would keep the tax revenue neutral by offering sales tax holidays throughout the year. Scott, however, has said that while he thinks the current arrangement of taxes on brick-and-mortar stores is unfair, he will not sign a bill that includes a new tax.

Here is the breakdown of the prevailing issues in the area of economic development:

ECONOMIC INCENTIVES

Description: In addition to creating the new DEO, Scott scooped up Gray Swoope from Mississippi to head up Enterprise Florida’s economic development efforts. Together they have touted successes at press conferences announcing new deals to bring companies and jobs to Florida, but the deals in the past have not always worked as planned. Although Scott has retreated somewhat from asking lawmakers to cut the corporate income tax, asking for a much smaller amount than the $1.7 billion he requested last year, he is still asking for $230 million for economic incentives to lure businesses to Florida, a sign the issue is of prime importance to the “jobs” Governor.

Outlook: Many Democrats are howling about the state’s economic development efforts, saying they amount to corporate welfare and do not really work as planned. Many Republican lawmakers applaud Scott’s efforts on economic development and the 2-point reduction in the unemployment rate since he took office, may not give Scott the $230 million he is looking for, given the $2 billion shortfall the state faces.

UNEMPLOYMENT COMPENSATION

Description: More changes to the unemployment compensation system could be in store, after new requirements were imposed in 2011 to receive benefits. Scott is looking for training for low-skilled workers and wants to change the system’s name to the “Re-employment Assistance Program”. Meanwhile, business groups such as the Florida Chamber of Commerce, Associated Industries of Florida and Florida United Business Association want to slow the increase of the unemployment compensation tax rate. The rate is skyrocketing (from about $8 in 2009 to about $170 per worker in 2012) after the business groups asked the Legislature to keep the rate level in the face of record deficits resulting from the recession and accompanying high unemployment rate.

Outlook: The House Business and Consumer Affairs Subcommittee have already passed its committee bill with Scott’s unemployment compensation changes. Unlike last year’s new requirements, however, the Senate has not taken up the issue. A letter from the business groups may be too little, too late for even those influential organizations to get the changes they seek, since the tax rate is slated to go up on Jan. 1, even though the first payments are not due until the spring.

INTERNET SALES TAX

Description: Florida does not currently charge out-of-state companies a sales tax for items purchased over the Internet. Traditional “brick-and-mortar” stores say they are at a competitive disadvantage despite investing money inside the state and creating jobs.

Outlook: Republican leaders in Tallahassee have been reluctant to embrace the idea of an Internet sales tax, citing their pledge not to raise or create new taxes. The idea, though, seems to have new momentum this year, with a couple of bills filed and another committee bill in the drafting process. Lawmakers have said they intend to keep the bill revenue-neutral, and will match any increase from the new tax with a decrease in property or the overall sales tax rate. Scott has stated he would sign such a bill, if it were truly “revenue neutral”.

WORKFORCE BOARDS

Description: Changes to the state’s 24 regional workforce boards are also on Scott’s wish list for the 2012 session. A committee bill in the House would restrict membership on the boards, which totals 60 or more in some cases, to that required by federal law and allow board members to submit short-form financial disclosure forms, instead of the long-form disclosures, as legislators are required to file.

Outlook: A bill including Scott’s preferred changes moved through the House Business and Consumer Affairs Subcommittee along with the unemployment compensation committee bill, but similarly, there is not yet any movement in the Senate on the issue. The bill is now known as HB 7023.

Gray Rohrer
The Current

Photo credits: © 2011 Historic City News staff photographer