SHARE:
Can Florida Compete?
To the west, Tampa Bay, astride the I-75 trade route. On Florida's tip, the feuding big-money fiefdoms of Palm Beach, Broward and Dade. If Florida exists less as a state than as a collection of economic rivals, then John Anderson may feel he has been drafted as a latter-day Otto von Bismarck, the 19th century Prussian who created Germany out of what had been a contentious gaggle of nation-states.
Anderson is president and CEO of Enterprise Florida, the public-private partnership that the Legislature created last spring to replace the state's Commerce Department. Enterprise will handle the marketing, job training and international trade functions once performed by the department, but it also has been given a $60 million toolbox of financial incentives and other resources to attract and build businesses. By January 1, Enterprise will have assumed administrative control of all the department's existing programs. So much for the easy part.
For Enterprise to succeed, Anderson must, in effect, rearrange the state's economic development universe, undoing years of the hidebound practices of both state, local government and local business groups. After years of thinking it could ride surf, sun and tourism to prosperity, the state has found itself with an economy that's filling but not nutritious: Florida remains the only big state to depend so much on the volatile tourism and construction sectors to fuel much of its economy. Good jobs continue to go elsewhere: As of 1993, not a single county had average earnings per job equal to or above the national average. And while Florida has the fourth largest population in the U.S., it can boast of only 12 Fortune 500 companies, placing it 15th in the country, well behind the other low-tax Sunbelt giant, Texas, which has 37.
From a crazy-quilt of business recruitment campaigns waged from chambers of commerce and economic development agencies all over the state, Anderson must knit together a seamless economic development strategy - one that goes beyond selling Florida's climate. Enterprise Florida must cast a positive light on a state beset with an outdated tax system, a creaky, inefficient regulatory structure, second-rate schools and an image dominated by sand and sun. It must also confront the central question of how the state should develop: as a low-tax, low-regulation haven or a world-class business center. And it must do so while being sniped at by those who question the effectiveness of public-private partnerships and Anderson's own performance. Anderson, 57, is a cheerful, soft-spoken man known as a consensus-builder. He came to Florida in 1992 as head of the Beacon Council, Miami's economic development organization, after stints as the chief economic development official for the states of Oregon, Washington and Texas. Along the way, he has made friendships that have served him well.
He was recruited to the Beacon Council by a group headed by GOP mainstay Jeb Bush. Anderson made friends and gained the respect of politicians in Tallahassee - including Lt. Gov. Buddy MacKay, Bush's rival - by his successful administration of $20 million provided by the state for loans to small businesses devastated by Hurricane Andrew. Bush touted Anderson for the Enterprise Florida job when the public-private partnership concept was in trouble in the 1996 Legislature. At the same time, a series of "economic summit meetings" around the state became a catalyst in getting the business community's support for both Enterprise Florida and Anderson to lead it. Anderson came away as a consensus favorite with backing from the state's business heavyweights, including the Council of 100, the elite Florida association of top business executives. And the Legislature resurrected the public-private partnership from the grave where it had buried it in 1995.
However much his challenge may resemble that of Bismarck, Anderson, the professional technocrat, can be expected to favor finesse over the "iron and blood" approach applied by the Iron Chancellor in unifying the recalcitrant German states. In his first months on the job, Anderson has focused on administration and hiring. Among his choices that have drawn praise is James Breitenfeld, former president of the Florida Economic Development Council, the statewide organization of economic development professionals, whom Anderson picked as Enterprise Florida's vice president and chief operating officer.
Anderson also is proceeding carefully at planning what he says will be the centerpiece of Enterprise Florida's effort: an ongoing series of brief economic summits to be held every three months at different locations around the state. The summits - modeled after those that led to the passage last spring of the Enterprise Florida legislation - will bring together economic development professionals, tourism industry representatives and government officials of both parties to create, "some sort of unity of purpose and action" at state government level. The notion of three-day committee meetings may not quicken the blood. But MacKay, who calls the idea "ingenious," says the summits will help preserve support for Enterprise Florida by letting the private sector exhort the public sector to tackle tough issues in a bipartisan atmosphere.
The first summit was held in Tampa in September, with a second set for Naples in December. Attendees at the Tampa summit heard comprehensive presentations on the tourism industry, the state's international trade picture and business recruitment. In describing the summit approach, Anderson lays out his vision of Enterprise Florida's role methodically, as if describing the workings of a watch rather than the hurly-burly of economic development. Anderson's long-term view creeps into his speech repeatedly: "At the end of the day ... " is a favorite phrase. Florida, he says, is a "place-product," a business location like an office park. In the case of Florida, the "product" is the tax and regulatory climate, and the education, transportation and social services infrastructures that state and local government officials create. Economic development officials then "sell" the product to employers.
Anderson says Enterprise Florida must also help shape the policies that create the Florida product. Fail to adequately fund the university system, to streamline regulation, to reduce crime, to create a dependable tax system, and it won't matter how good the "sales force" might be. Florida, the product, will flop. "Economic development is common sense and hard work. That's all it is. But if you don't have the infrastructure in place, if you don't understand the role of policy to help make the product competitive, then my contention is you can throw all the money you want at marketing and strategy without effect," he says. Anderson outlines a number of goals for the summits. He thinks it's vital for the state's warring regions to begin cooperating - no small feat in a state where a melee of economic development groups don't communicate or share a vision of what's good for Florida or even their own communities. Regional powers such as Orlando and Tampa Bay, as well as smaller counties like Sarasota and Manatee, see each other as competitors in an alley fight for employers. The consequences are predictable: In Pinellas, county development officials snipe at the Tampa Bay Regional Partnership, a multicounty economic development effort that attempts to embrace most of Southwest Florida. In South Florida, Broward, Dade and Palm Beach compete ruthlessly for new employers, and even sometimes dangle incentives to lure existing businesses from each other.
One of the few examples of successful intra-regional cooperation is the Economic Development Commission of Mid-Florida, which under former president Rick Tesch has seen Orlando combine forces successfully with Orange, Osceola, Seminole and Lake counties.
Anderson doesn't expect the summits to eliminate the competitive frenzy, but he believes the state's regions can become a little more like banks: They can compete head-to-head for specific customers while cooperating on lobbying and policy initiatives that will benefit them all. Since it doesn't have members who pay dues, Enterprise Florida can present a true consensus rather than a special interest, Anderson argues.
"I know for a fact that in Dade County, with most of the commissioners there, if you suggest to them you want to cooperate on something with Broward or Palm Beach, they get very upset. Their perception is, ?It's my constituents who put me in office who are paying the taxes that are helping do this. I'm not going to stand up in front of my constituents and say we should spend money on the other side of the border.'" The summits will give politicians cover from partisan attacks - a "heat shield" in Anderson's words - to collaborate with others from different regions without appearing to sell out their own.
Anderson also expects the summits to be breeding grounds for initiatives to deal with some of the structural problems that make Florida less business-friendly. The tax system, for example. MacKay and others quarrel both with specific taxes - the sales tax on tangible property, intangibles tax and utility gross receipts tax - and also with the haphazard nature of the whole tax system. Dr. Neil S. Crispo, a senior vice president for research and operations at Florida TaxWatch in Tallahassee, says businesses see a state lurching from one tax idea to the next, with no long-term fiscal plan to pay for either basic services or a vast and growing body of regulations. As examples of willy-nilly tax policy, he cites initiatives like the proposed penny-a-pound tax on sugar and the Save Our Homes measure, a tax cap that benefits primarily wealthier property owners and shifts the tax burden to other taxpayers.
Miami businessman Jeb Bush says that businesses need dependability and stability in a tax system. "When you are making a five-year projection and you are investing, you want to know what the tax code is during that period. Here it is never quite sure." Florida's government entities need to change the way they respond to business needs, says Anderson. In that regard, he notes, one of the most frequent complaints businesses voice about Florida is that the permitting process is a mess. The state's Administrative Code grew from 17 volumes in 1986 to 25 in 1993, with the cost of unnecessary and inefficient regulation estimated in the billions.
How Anderson will get consensus on tax reform out of the summit process is a good question in a state where no leader dares even whisper the T-word. And ultimately, issues of tax and regulatory policy lead smack into the Great Divide in economic development in Florida: In one camp are those who believe that the state can compete best by limiting government power and spending and keeping taxes, regulation and the cost of doing business low. In another are those who think the problem is not too much government, but too little. Government needs to invest in communications, schools and roads, argues this group, which thinks the state is closer to Third World than world-class.
MacKay, a fan of both Enterprise Florida and Anderson, acknowledges the split. On the question of incentives, for example, MacKay says he would favor tax incentives for private-sector research, in pursuit of breakthroughs that could attract an industry group and spawn many businesses. But he disagrees with those who believe that Florida ought to be throwing economic incentives at companies the way Alabama did to lure Mercedes, or as South Carolina did to get its BMW plant.
"I don't think the state of Florida has to give things away in order to succeed. We don't have to relax our environmental standards. We do have to make our system work better. We need a strategic vision of who we are and the tax incentives need to square with that vision.''
MacKay's position may not carry the day. The now defunct Commerce Department commissioned a study of more than 300 business executives earlier this year to get feedback on their impressions of the state. A majority favored incentives or tax exemptions for relocating businesses.
Bush, like MacKay, questions the wisdom of incentives, but sees "government investment" as just another word for spending. Ideally, he says, government ought to improve the state's business climate - lowering workers' comp premiums, funding good schools, creating a favorable permitting environment - and get out of the way. Business climate, he says, is a more important issue than business recruitment. "A perfect business climate will allow Enterprise Florida to go out of business." Bush thinks Anderson is the right man to handle Enterprise Florida's thorny mission. He thinks the organization will develop "slower than people might want," but that Anderson's leadership will put it on a "much sounder footing." Anderson can be most effective not by trying to downplay the city-state nature of Florida, Bush thinks, but by working in concert with it.
Not everybody is an Anderson fan. Since his departure from the Beacon Council, some Dade politicians have raised questions about its effectiveness in creating jobs. One has ordered an audit of the agency.
Anderson, for his part, says he prefers to look forward. And for the moment, he has both a store of political capital and time - politicians like MacKay talk of being pleased with a "very impressive looking structure" taking shape. In addition, Enterprise Florida doesn't get a report card from the Legislature for three years. How will he judge his own success? If the business community finds the summit process useful, and if Enterprise Florida can make headway in "breaking down some of the barriers within the state" and achieve "some degree of coordination and cooperation," he'll believe the concept is working. More specifically, Anderson says to watch for progress on a fledgling effort to develop a technology corridor from Tampa Bay to Orlando on I-4 and then over to the Kennedy Space Center. Anderson says he's talked to State University System Chancellor Charles Reed about establishing programs at University of South Florida and University of Central Florida that would further the project.
"I think that the fundamental educational infrastructure is in place and quality of life requirements are satisfied. I think you can look for some sort of initiative in the next few months that will begin on a pilot basis to test that thesis," Anderson says.
In the meantime, Anderson will be watching carefully for signs that the business community is buying into his approach. If the summits work and there's increased cooperation, "there's going to be a very large constituency of owners in this process. If it doesn't work, there are not going to be many owners."
Business Beat - Week of May 3rd
