Is the Florida Legislature Cutting to the Quick?

With a state economy teetering on freefall and many businesses struggling to stay afloat, Florida lawmakers kick off their 2009 legislative session today faced with a more than $2 billion budget shortfall and looming cuts to major state programs. Associated Industries of Florida and the Florida Chamber of Commerce say a bigger state investment – not more budget cuts – is needed to spark economic development and create new jobs.

Is the Florida Legislature Cutting to the Quick?Associated Industries of Florida and the Florida Chamber of Commerce say a bigger state investment – not more budget cuts – is needed to spark economic development and create new jobsBy Linda Kleindienst

With a state economy teetering on freefall and many businesses struggling to stay afloat, Florida lawmakers kick off their 2009 legislative session on March 3 faced with a more than $2 billion budget shortfall and looming cuts to major state programs.

Roads, schools, health care and myriad state programs are likely to take a hit from the Legislature’s budget ax. State workers, who haven’t had a pay hike in three years, may go yet another without seeing extra dollars in their paycheck.

But those lobbying on behalf of Florida’s business community hope the House and Senate will agree to protect – and perhaps even funnel more funds – into the programs designed to help the state’s economy grow, maybe giving it enough juice to start bouncing back.

As legislators begin their work, here is an advance look at the message they can expect to hear from the two largest lobbies representing Florida business interests, Associated Industries of Florida and the Florida Chamber of Commerce:

• Build infrastructure, like roads and bridges. That will put some of the state’s growing ranks of unemployed back to work and prepare Florida for the growth still expected to come.
• Invest in high-tech research and development to foster new businesses and grow high-wage jobs.
• Tackle the soaring cost of property taxes and insurance. Keeping those costs down might keep some businesses viable until the economy improves.
• Develop better career education opportunities to provide the skilled workers that companies need and encourage development or relocation of high-wage jobs.

“First of all, our message will be, ‘Do no harm,’” said David Daniel, vice president of governmental affairs for the Florida Chamber of Commerce, which has 139,000 members. “We’re in challenging times. Let’s be calm, not too reactionary.”

But the Chamber also has developed a legislative agenda, dubbed the “Economic Pillars” program, that will encourage state lawmakers to consider a wide variety of issues from housing and water quality to health care and education – all of which will ultimately affect the state’s business climate.

“Let’s focus on where we want to be and set a plan to get there, with benchmarks,” Daniel said. “We need to drive the agenda in Tallahassee rather than leaving them to figure it out.”
Barney Bishop, president and CEO of Associated Industries of Florida, said the top priority for his 10,000-member organization is an economic stimulus plan that includes public works programs and economic development incentives. The idea is to generate sales tax revenues through construction projects that will then bolster the state’s shrinking bank account – and possibly help offset some of the more painful state budget cuts.

Primary among the group’s recommendations is state investment in tackling a $30 billion infrastructure backlog, including road construction. According to the Florida Department of Transportation, for every dollar spent on road development, $5.50 is returned to the economy. Many business leaders consider that a no-brainer.

“You can’t do any development without the roads,” Bishop said. “That creates jobs, puts people to work and puts sales tax dollars into the state’s coffers. And when the economy picks up in 2011, the state will be able to take off.”

Battling for Business

Here are just a sample of the issues Associated Industries of Florida and the Florida Chamber of Commerce will ask the Legislature to address in 2009.

INSURANCE: Despite legislative intervention to toughen state regulation of property insurance, rates continue to climb even as many businesses struggle to survive. “If we can’t get our property insurance rates down, no one will come to Florida,” Bishop said. Meanwhile, Citizens Property and Casualty Co., the state’s insurer of last resort, is now the state’s largest insurance company – with $485 billion of potential exposure and only $3 billion in the bank. That means the state has to find a way to pay the bill if losses from a big hurricane exceed $3 billion. “We are financially unprepared for a hurricane hitting Florida,” Daniel said. “The taxpayers are on the hook if there is one.” Both business groups contend that those with the most risk who are being insured by Citizens are not paying their fair share and that the state should work to reduce the number of properties insured by Citizens.

TAX BREAKS: If you give a tax break, they will come. Business leaders are convinced that in hard economic times the states that lure new high-wage jobs – and encourage existing businesses to expand – with “incentives” will ultimately be the most successful. “We have this ethnocentric concept that sun and fun will attract industries to Florida,” said Associated Industries’ Bishop. “Well, other states have sun and fun as well. We’ve increased our taxes … we’re not competitive. That’s why BMW is building in South Carolina.”

HEALTH CARE: The Chamber’s guide to its business agenda quotes data from the Florida Department of Financial Services that show the number of small employers offering health care coverage dropped by 53 percent from 1996 to 2004, a clear sign that small business can’t keep pace with rising health care and insurance costs. The Chamber promotes the idea of expanding options for businesses to purchase affordable health care through small group plans. Associated Industries wants to make sure the state doesn’t continue to add new mandates for health insurance coverage, claiming it is making policies too expensive for small businesses to afford.

RESEARCH AND DEVELOPMENT: Fostering and subsidizing research through Florida’s universities is one way to create high-wage jobs, especially in biotechnology. It’s also the first step in bringing new products to the market and helping to create new businesses. “Why can’t the next breakthrough on solar energy come from Florida?” Daniel asked.

TAXES: In January 2008, Florida voters amended the state constitution to limit the annual increase in assessments on non-homesteaded property to 10 percent a year. Business leaders say that’s still too much, that when it comes to property taxes that are based on those assessments, they are still paying more than their fair share. “We used to be a low-tax, low-insurance state, but no more,” Daniel said. The Chamber is pushing for a 5-percent cap on yearly increases in business property assessments. Associated Industries wants it set at 3 percent, the same break enjoyed by homesteaded residential properties now protected under the Save Our Homes provision in the state constitution.