The '06 Agenda
The 2006 legislative session opens March 7 with the usual flowers on the desks, but without free meals and drinks. It's the last regular legislative session for Gov. Jeb Bush, who leaves office Jan. 2. Bush's legacy is more or less set ("Jeb's Legacy," page 52), but he has entered this session with vim and vigor, pouring it on as he nears the finish line.
In education, Bush advocates "reforming" middle schools, making high school more relevant, putting more money into recruiting math and science teachers, increasing rewards for the most effective teachers, modifying the class-size amendment and replacing the voucher program that the Florida Supreme Court invalidated.
On tax cuts, Bush is determined to maintain his streak of having cut some tax each year during his tenure. This year's a biggie because the state's rolling in dough, and Bush is seeking $1.5 billion in cuts in property, sales and other taxes. The session will no doubt produce some surprises, but following is a highlight of issues that Florida business executives consider important or interesting as the session begins.
? Education
Opportunity Scholarship vouchers may not be the most important aspect of education in Florida, with fewer than 1,000 students, but school vouchers "will be front and center in the Florida Legislature this year," Senate President Tom Lee says. "It's very popular with legislators."
Just what legislators will do, though, is unclear.
The Florida Supreme Court ruled in January that the voucher program, giving students in "failing" schools a state subsidy to attend private schools, violated a provision in the state constitution requiring a "uniform, efficient, safe, secure and high-quality system of free public schools." There are plenty of other ways that Florida education falls short of that standard, but those haven't been challenged in court. Bush likes the permanence of a constitutional amendment to allow vouchers. But will it be a narrow measure that encompasses only vouchers and similar programs or a broader vision for education that tries to thoughtfully embrace some reliance on private schools? Vouchers energize the Republican base, but if they were a ballot issue, they also would draw opponents among education traditionalists who often vote Democratic. There will be some complex political calculations going on with this issue.
A similar political dilemma faces legislators on the class-size limitations approved by voters in 2002. The class-size requirements are soaking up more and more money and have produced spinoff issues, such as whether a co-teacher in a classroom should count as lowering the class size even if the room itself has too many students.
Bush wants to relax the class-size limits -- as with the bullet train, another case of asking voters to undo a decision in which they ignored his counsel the first time. But legislators who are inclined to ease the limits will face attacks from opponents charging they're trying to cram more students into a classroom.
Trying to strike a balance will likely involve offering voters (meaning education interests) something else for education in return for repealing the limits. At one point last year, the payback was minimum pay for teachers, but the minimum was, well, minimal.
One proposal now is to create a guarantee that at least 65% of school funding will go to "the classroom." Mark Pudlow at the Florida Education Association, which represents teachers, calls that a "magical fairy dust solution." What is a "classroom" expenditure? Current statistical measures, he says, don't include counselors but do include football coaches, for example. "We need more than a 65% solution to solve funding problems in the classroom," Pudlow says.
Bush also has proposed a program to attract teachers to Florida and encourage students to enter the profession. Florida needs more than 30,000 new teachers this fall, and hundreds of classrooms will have teachers teaching outside their subject areas. Some of the money in Bush's proposed program, about $40 million, goes for stepped-up recruitment and incentives for students who go into teaching. Most of the money, about $188 million, would be earmarked to buy laptops for every teacher so they can do paperwork and planning from home. Some teacher groups responded that Bush ought to just pay teachers more money.
In Jeb Bush's last session, the Legislature has billions to play with as it considers everything from tax cuts to land conservation.
? Tax Cuts
The state is swimming in money from a strong economy. Dominic M. Calabro, CEO of Florida TaxWatch, figures the uncommitted dollars, beyond a "continuation" budget at current levels, to be more than $5 billion, including local property taxes from rising valuations. He thinks a billion-dollar tax cut is plausible from the $70-billion to $75-billion budget.
Quickly emerging, of course, is a duel over what, where and how much to cut.
Bush has proposed $1.5 billion in tax cuts, more than a third of it for businesses. He wants final repeal of the intangibles tax, a perennial Bush target (paid by about 300,000 individuals and businesses). He also proposed repeal of the tax on liquor by the drink ($51 million), which was earlier cut by two-thirds and now is, in Bush's words, a "nuisance." Last year's proposed sales-tax exemptions on equipment for research and development and manufacturing are back, along with a $3-million exemption for equipment used in the space and defense industries.
For individuals, Bush proposed making permanent the separate tax "holidays" for hurricane supplies and school supplies, at about $40 million apiece. Bush also wants a 9% rollback in the so-called "required local effort" for schools, which is the minimum property-tax millage that local districts must impose as part of the school-funding formula. That's a $570-million item, amounting to an average of $55 per homeowner, though it applies to business and rental property as well. Homeowners, including owners of mobile homes on leased land, would also get a one-time $100 rebate by check, an idea also proposed by House Democrats, at a total cost of about $500 million.
Some senators, including President-designate Ken Pruitt, have proposed making portable the "Save Our Homes" limits on residential tax increases. People who move could take the accumulated tax break with them and apply it against taxes on their new houses. Bush declined to join in on that idea, but it may make it to the final dickering between the two chambers.
Bush's proposals have critics. Says Pudlow of the education association: "They're talking about tax refunds to consumers at the same time we have no money for class size. They want tax-free plasma TVs and $100 to every taxpayer?"
"They're talking about tax refunds to consumers at the same time we have no money for class size. They want tax-free plasma TVs and $100 to every taxpayer?"
? Spending
The tax cuts, however sized and distributed, will be small compared to the new spending. Again, it's a question of who shares in the largesse.
Social services, including Medicaid, inevitably consume a big chunk of new money, and there will probably be pay increases at the cost-of-living level for state employees.
State universities want full-enrollment funding. Private colleges and universities want more for financial-need scholarships. Bush has his teacher-recruitment program and is proposing another increase in per-student spending on schools, much of which is going toward the new class-size requirements. He also is proposing $52 million in additional need-based aid to boost minority enrollment in state universities.
Bush also wants to do more capital spending from current revenue instead of relying on more debt financing.
Calabro of TaxWatch has endorsed that approach. "You can never go wrong paying down state debt," he says. Debt has doubled to $22 billion over the last 10 years. Even with the state's new AAA credit rating, interest can get expensive on $22 billion.
Calabro also thinks this would be a good time to restore money to various earmarked trust funds that were tapped for general spending during leaner times a few years back. Those trust funds were created for specific purposes and often were funded by new taxes, Calabro notes. "It's a matter of integrity," he says. "That's why they're called 'trust' funds."
? Land Conservation
Another place where paying now saves a lot later is in acquisition of environmentally sensitive lands. The Florida Forever program has been budgeted at the same $300 million a year for 15 years, even as land prices have soared.
A coalition of conservation and environmental organizations called the Forever Florida Coalition has detailed a need for $18 billion in spending on parks, recreation facilities and endangered lands and wildlife. And that doesn't include Everglades restoration. The coalition members, such as Audubon of Florida and 1000 Friends of Florida, aren't suggesting that all should come from the state, though.
The subtext for the land-acquisition portion of the $18 billion is that the land ought to be acquired as soon as possible, before prices go up even more or developers beat conservationists to the land.
? Economic Development
The governor usually has a list of incentives and subsidies for business growth, and this year the legislative proposal adds up to $630 million aimed at what Bush says will be higher-paying jobs for more highly educated people.
The biggest single item is $250 million for what Bush calls "once in a lifetime" opportunities to land a big new venture like the Scripps Research Institute, which the state lured with $310 million from a one-time federal program. The plan has detractors. If the state invested more in the quality of education, it wouldn't have to "bribe" businesses to come here, Democratic Rep. Anne Gannon of Delray Beach told the Palm Beach Post.
Among other proposals, Bush hopes to push through $75 million in venture-capital tax credits for financing of early-stage businesses and "energy diversity tax credits" for hydrogen-fuel vehicles, hydrogen and other "clean fuel" filling stations, hydrogen fuel cells and production of biodiesel and ethanol.
Bush also is advocating stepped-up efforts to attract space-related businesses as the space shuttle program moves toward an end by 2010 and as competition from other states grows ["Countdown," July 2005, FloridaTrend.com]. Among the proposals is a consolidation of Florida's space-related agencies and spending $35 million to help Florida businesses and space-related organizations get contracts to assemble and launch the so-called Crew Exploration Vehicle, the successor to the shuttle that is designed for interplanetary travel.
Bush's budget calls for $630 million to fund business growth -- including $250 million for "once in a lifetime" opportunities.
? Tort Reform
Squarely in the crosshairs of business interests this year is the legal doctrine of "joint and several liability." The doctrine, which dates back hundreds of years, says that if several defendants share responsibility for some harm but one can't pay its share, the others have to pay up to keep the victim whole.
The assault on joint and several is part of the overall "tort reform" campaign -- one destined to be a perennial legislative issue because lobbyists on both sides are so well-funded. The issue, whether in the guise of capping legal fees, imposing doctor discipline or capping damages, tends to play out in dueling anecdotes. The Florida Chamber of Commerce likes to cite a Disney case brought by a woman who was riding in one of the little race cars at the attraction when her boyfriend slammed into the back of her. Although Disney was held only 1% responsible and the boyfriend 85%, Disney ended up paying 86% of the damages, the chamber says. For chamber lobbyist and Executive Vice President Mark Wilson, the issue is "fairness" to businesses that get sued.
Sammy Cacciatore, who chairs a trial lawyers committee opposing the chamber's repeal efforts, says extreme cases like the one involving Disney were addressed in a tort reform bill 20 years ago. The latest effort, he says, is really an effort to shift the burden of an injury onto the victims themselves or onto the state through social programs such as Medicaid.
Previous components of "tort reform," notes the Academy of Florida Trial Lawyers, have failed to produce any noticeable reduction in insurance premiums.
In addition to the Florida Chamber, which sees repealing joint and several as job No. 1 in meeting its goal of becoming the alpha dog of business lobbying, the effort to repeal joint and several also has a champion in House Speaker Allan Bense, who wants to pass the legislation in the first two weeks of the session. The Senate is more skeptical of tort reform, so this will be a big bargaining chip between the two chambers.
? Other Notables
It hasn't a prayer, but Rep. Susan Bucher (D-Lantana) has introduced legislation that requires every employer with more than 10,000 employees in Florida to spend at least 7% of payroll on healthcare for its workers or pay any deficiency from that into a state health fund. Business lobby Associated Industries of Florida derides it as a "payroll tax" and "a wolf in sheep's clothing."
Restrictions on constitutional amendments will be discussed again, along with a complete rewrite of the constitution to weed out the trivial and the troublesome. The chamber also wants a crackdown on "petition fraud" by signature gatherers. A requirement of a 60% supermajority is already on the ballot for this fall.
The Florida Association of Colleges and Universities once again is urging the Legislature to fund the matching program for major donations to state universities and to increase financial aid for Florida residents at independent colleges and universities. It is resisting state aid for students at for-profit universities.