October 31, 2014

Florida Close-Up

John F. Berry | 1/1/1996
You may recall the Legislature last spring voted down a plan to fold the Department of Commerce into a public-private partnership called Enterprise Florida. Republicans scuttled the proposal, which was strange considering it was about as pro-business and anti-bureaucracy a scheme as you could imagine. Not only that, it had the vocal support of the Council of 100, a gathering of the state's business elite. But Enterprise Florida also had the enthusiastic backing of the Chiles administration, which may have been the kiss of death for the idea among Republican legislators.

Enterprise's supporters are at it again, but with a difference. In late November, they convened the "Florida Economic Development Summit" in Tallahassee for the sole purpose of hammering out a new pitch for Enterprise Florida. And to help grease the skids, a number of opponents from the first attempt were given key roles in the discussion, including Sen. John McKay, a Bradenton Republican representing Senate President Jim Scott, who put the coups de grace to Enterprise Florida last year.

Keeping a steady hand on the tiller during the summit, Barnett President Allen L. Lastinger, Jr., a Council of 100 member, helped guide the discussions through the many political shoals. As the Economic Summiteers rolled through proposed organizational charts and plans for spurring industrial development in the state, Lastinger voiced amazement at how unified the group was. "This is too easy," he said. And Gov. Lawton Chiles, when asked if he wanted to be heard, responded, "It's too peaceful. I'm afraid I'll screw it up."

Not to worry, Governor. With politicians, bureaucrats and business people mixing it up, screw ups are inevitable. And indeed, a short time later somebody raised the delicate issue of what happens to the hundreds of bureaucrats at Commerce. Do they lose their jobs? Compete for jobs in the new entity? Or simply get shifted en masse to the new organization? The mere suggestion of this latter possibility caused Florida Progress CEO Jack Critchfield to bristle. If John Anderson, the recently appointed CEO of Enterprise Florida, isn't free to hire and fire whom he pleases, said the powerful Critchfield, "then we're wasting our time."

Stay tuned.

The next day, in the oak-paneled sanctity of the Tampa Club high above that city, I attended another function which stood in striking contrast to the summit the day before. For while the message from the business people at Tallahassee was that Florida needs a new unbureaucratic, pro-business image to attract and develop industry, in Tampa it was that Florida needs nothing short of a fiscal revolution to reverse its increasingly precipitous slide toward budgetary disaster.

Tampa's dour messenger was David Ambler, a bearded, affable senior municipal credit analyst from Sanford C. Bernstein & Co., the New York investment research firm. Tampa was one stop in a dog-and-pony show around the state to discuss Ambler's findings published by Bernstein in November under the title, "Outlook for the State of Florida."

Wrote Ambler in his introduction: "The realities of moderating economic growth must contend with the varying agendas of the state's young and elderly populations while also responding to the conflicting agenda of an anti-tax movement. The credit outlook for the State of Florida can therefore be characterized as weak."

Juxtaposed against the efforts in Tallahassee by the business community to educate the Legislature about the need for Florida to develop and attract business, Ambler's finding were deeply troubling. All of them have appeared in the pages of this magazine at various times during the past year. But what Ambler does so effectively is to present the unvarnished facts in a slim, well-illustrated brochure of about 15 pages.

It's all there: Florida's rapid population growth, too much reliance on tourism, an aging population, a crime rate nearly 50% greater than that of the nation, escalating education needs, an unrealistic and inadequate tax system. One result of all this, predicts Ambler, will be generational warfare: "We expect that the resulting strain will heighten tensions between younger voters with children competing for state resources and the elderly, who are more focused on health and crime issues."

What Ambler is predicting is that before the end of the decade, these and other fiscal negatives will combine to cause the two top rating agencies, Standard & Poor's and Moody's Investor Service, to lower Florida's credit rating from "AA" to "A."

The Bernstein analyst is telling investors in Florida to diversify their portfolio away from the state's general obligation bonds. But a downgrading of Florida has broad implications for the economy, especially coming at a time when its business community is attempting to improve the state's business climate in order to broaden its narrow economic base.

The message I gleaned from attending these two gatherings back to back was this: Enterprise Florida is indeed a worthwhile project that should be given a chance. But Florida needs to address long-ignored fiscal fundamentals before Enterprise Florida or any other development organization can succeed.

Incidentally, anyone interested in reading the Bernstein report may request it through the firm's offices at 767 Fifth Ave., New York, NY 10153-6123. Tel. 212-486-5800. The report should be must-reading for Florida legislators as they approach the coming 1996 session -- although they have never let economic and fiscal realities get in their way.

Tags: Florida Small Business, Politics & Law, Business Florida

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