News Articles
Tax Incentives, Workforce, Training are Key Issues in Second Half
From the status of the budget to funding projections and the progress of key bills, we have compiled current information on the legislative issues that will have a direct impact on economic development in the region and across the state.
House Wrapping up Budget Process
The Florida House Appropriations Committee approved a $69.2 billion budget on Thursday, February 2, that includes funding for economic development at a significantly lower level than the Governor’s recommendations, although it includes very few cuts from the previous year funding levels. Highlights include:
- Enterprise Florida operating budget maintained at $14 million
- A $19.1 million increase in funding for VISIT FLORIDA
- Space Florida budget maintained at $10 million
- $72.5 million for economic development programs including Quick Action Closing Fund, Innovation Incentive Fund and Qualified Targeted Industry program.
- $2 million appropriation for Economic Gardening (GrowFL) program
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Senate begins budget negotiations
Last week, the Florida Senate began its budget process: releasing budget allocations and allowing budget subcommittees to draft their proposals. The Senate Transportation and Economic Development appropriations committee, after three committee meetings, produced its recommendations. The overall funding levels are lower than the governor’s recommendations, and Enterprise Florida received cuts in its operating budget.
Highlights include:
- Enterprise Florida operating budget reduced to $13.6 million(no funding appropriated for the Sunshine State Games and Minority Business Development)
- A $5 million increase in funding for VISIT FLORIDA
- Space Florida budget maintained at $10 million
- $77 million for economic development programs including Quick Action Closing Fund, Innovation Incentive Fund, Qualified Targeted Industry and Brownfield tax refunds/credits, and defense programs. (Note: This appropriation was funded in the newly created SEED trust fund, which allows for flexibility in the use of funds; a priority of Enterprise Florida and Governor Scott. )
- $50 million in a newly created Economic Development Governor’s Reserve Fund (Governor Scott requested $100 million)
- $2 million appropriation for Economic Gardening program
- $30 million in the Economic Development Transportation Fund (Road Fund)
During the next two weeks the Senate budget will receive numerous revisions as it makes its way to the Senate floor for a vote. Once the full Senate has voted on the budget, the House and Senate can begin the process of budget conference during which members of each chamber work out their budget differences.
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Confidentiality Legislation Moves Forward
The Florida House’s Government Operations Subcommittee heard House Bill 7115, which relates to the reenactment of sunshine exemptions for economic development agencies on February 8. A priority for Enterprise Florida and Florida’s economic development community, the reenactment of this exemption is imperative for Florida to remain competitive in business retention and recruitment.
Florida has a long record of government in the sunshine with limited exemptions. Each exemption that is passed into law receives thorough review and legislative discussion before being implemented into law and comes under additional review every five years.
Currently, Florida’s economic developers use a very narrowly crafted sunshine exemption while working with economic development projects. The current exemption provides that:
*Information regarding a company’s plans, intentions and interests is confidential for 12 months from the date confidentiality was requested unless otherwise disclosed. (There’s an optional 12 month extension under certain conditions)
*Trade secrets, proprietary confidential business information, account and personnel identification numbers remain confidential beyond the initial 12 month period (until otherwise disclosed)
*Certain information remains confidential for the duration of an active incentive agreement (average wage, amount of taxes paid, and certain sales figures)
*The statute lists specific information that can be disclosed and allows for statistics to be published in aggregate.
Public disclosure while the deal is still active presents a major competitive disadvantage for Florida.
- Public disclosure before land and other transactions are complete could compromise the company’s position in those deals (e.g., purchase prices on land or buildings could be artificially inflated).
- Company’s stock value (or other valuation) may be impacted.
- Company employees may choose to leave based on premature news.
- The value of incentives offered by Florida will be publicly available – even to other states competing for the project – allowing the competitor state to one-up Florida’s proposed deal.
The legislation received unanimous support from the subcommittee and now awaits its next hearing.
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Formation of Florida’s Infrastructure Fund Moves Forward
Florida lawmakers continue to face budget shortfalls, solutions to adequately fund the state’s infrastructure needs are in short supply. An Enterprise Florida priority, Senate Bill 1472 and House Bill 1491 relating to the formation of Florida’s Infrastructure Fund (FIF), would allow infrastructure projects to be built with little to no cost to the state. Both pieces of legislation were heard in their respective first committees of reference this week and received favorable support.
The FIF would be a $700 million Florida-focused infrastructure investment program for the Florida Opportunity Fund (FOF.) The FOF would raise $700 million of investment capital from private capital sources to fund the program, to go along with $700 million in future contingent tax credits used only as a guarantee to the principal investment to program investors. Creation of the FIF could potentially result in over $6 billion in funding for infrastructure projects and over 60,000 new jobs.
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Legislation of Note
House Bill 1119 /Senate Bill 1150, relating to New Markets Development Program – This legislation raises the cap on the New Market Development Tax Credit program from $97.5 million to $195 million. The program allows community development entities to invest capital into qualified businesses in Florida’s low-income communities in exchange for a tax credit.
House Bill 7087, relating to economic development – A bill originating from the House Finance & Tax committee, this legislation contains numerous policy issues relating to tax exemptions. Of interest to Enterprise Florida stakeholders is the portion which contains an EFI legislative priority: reducing the 10% productivity increase requirement to receive exemptions on sales and use tax for manufacturers to 5%.
House Bill 5501 , relating to one-stop business registration portal- This legislation will reduce excessive burdens and regulation on businesses in Florida by directing the Department of Revenue to establish One-Stop Business Registration Portal. This portal will allow individuals & businesses to submit applications for various licenses, registrations, or permits, file various documents, or remit payment for various fees to state department or agency in one location and in one payment.
House Bill 507 /Senate Bill 684, relating to Manufacturing Incentives – This legislation designates an executive director of manufacturing for Florida, amends the capital investment tax credit and creates a manufacturing capital investment tax credit. Enterprise Florida is working closely with the House sponsor and the Manufacturing Association of Florida on this legislation.
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Secretary of Commerce Gray Swoope presented an overview of the 2011 Florida Incentives Report to the Senate Commerce & Tourism and Transportation & Economic Development Appropriations committees.
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House Update
The House Economic Affairs Committee met Jan. 19. Included on the agenda was House Bill (HB) 7027, sponsored by the House Business and Consumer Affairs Committee and Rep. Doug Holder (R-Sarasota). The bill, which proposes changes to Florida’s unemployment compensation program, was reported favorably and now moves to the House floor for final consideration. HB 7027 would:
- Require training for unemployment compensation beneficiaries who score below minimum proficiency on a skills test portion of the benefits application process;
- Extend the statute of limitations for the state to seek compensation and prosecute unemployment compensation fraud;
- Permit employers not to pay into the workers’ compensation system for layoffs related to man-made disasters such as oil spills and terrorist attacks;
- Rename the “Unemployment Compensation Law” the “Re-employment Assistance Program Law.”
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Workforce Florida Bill of Interest
Senate Bill (SB) 1314 by Senator Don Gaetz (R-Destin) will be heard in the Senate Committee on Education PreK-12 on Jan. 24. If passed, the bill will require each district school board, in collaboration with Regional Workforce Boards, economic development agencies and postsecondary institutions, to develop a three-year strategic plan addressing and meeting local and regional workforce demands.
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Florida Statute 288.075
SB 1206 and PCB GVOP-15 Relating to OGSR/Economic Development Agencies
The bill changes the current exemption for information related to the plans, intentions, or interests of a private company, person or individual considering locating, relocating, or expanding its business operations in Florida. The bill reduces the time that such information may be exempt from public records by repealing the optional 12 month extension of such exemption.
Under current law, information related to the plans, intentions, or interests is exempt for 12 months after the date an economic development agency receives a request for confidentiality or until the information is otherwise disclosed, whichever occurs first. The bill provides that the information may now become public record 90 days after the signing of an economic incentive agreement, 12 months after the request is received, or until the information is publicly disclosed, whichever occurs first.
The bill also makes changes to the exemption for information related to economic incentive programs. The bill provides that information related to certain wage, job, and tax information becomes public 90 days after an incentive agreement is signed. For example, the amount of tax refunds, tax credits, incentives paid to the business, and monies refunded back to the state become public record after the 90-day time period.
The bill also specifies that tax information that is still considered confidential and exempt may be reported in the aggregate in EFI’s annual incentive report.
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QTI Fix
During the 2011 Legislative Session, Representative Coley offered an amendment on HB 879 for economically disadvantaged counties in North Florida. This amendment was intended to revise and reduce the local financial support requirements from 20% to 10% for a 3 year period for the QTI Program. Because of the BP Oil spill, state worker layoffs and other financial factors, this amendment was well received and passed both Chambers, then signed into law by the Governor. After speaking with EFI and DEO their staff, it became clear that staff had interpreted the law differently than the legislature’s intent. Currently, there is an amendment that will soon be filed to one of the QTI bills to fix this glitch and interpretation.
Proposed Fix: To be offered by Legislators from Big Bend/Northwest Florida
Amending Section 288.106(4)(f)
Effective July 1, 2011, notwithstanding paragraph (2)(j)(k), the department office may reduce the local financial support requirements of this section by one-half for a qualified target industry business located in Bay County, Escambia County, Franklin County, Gadsden County, Gulf County, Jackson County, Jefferson County, Leon County, Okaloosa County, Santa Rosa County, Wakulla County, or Walton County, if the department office determines that such reduction of the local financial support requirements is in the best interest of the state and facilitates economic development, growth, or new employment opportunities in such county. The amount of reduction in local financial support shall be provided by the department using funds from the account. The total amount of department funds provided for the annual tax refund to a qualified business shall not exceed 90 percent. This paragraph expires June 30, 2014.
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CS/HB 595 Revitalizing Municipalities
The Florida Legislature has created or authorized the creation of several programs and mechanisms to encourage businesses to operate in and provide jobs in distressed areas; and to assist local governments in financing infrastructure and capital projects that will result in revitalizing business and residential communities and creating jobs.
The bill creates the ―Municipal Revitalization Act,‖ (Act) in ch. 290, F.S., relating to urban redevelopment. The Act allows municipalities with a specified population that are located within an enterprise zone to designate a sales tax TIF (tax increment financing) area to support the development of a retail development project by resolution. It also allows the governing bodies of the enterprise zone where the sales tax TIF area is located to receive from the state a portion of an annual increase in sales tax collections. As of April 2011, three municipalities had a population over 300,000 and have designated one or more enterprise zones: Jacksonville, Tampa, and Miami.
The bill amends the provisions relating to the distribution formula under the Municipal Revenue Sharing Program, to require distributions to municipalities that have a sales tax increment redevelopment district prior to the final adjustment. The distributions must be made to the appropriate governing body for distribution.
The bill requires the Department of Revenue to determine monthly, the specific amount payable to each eligible designated redevelopment agency and the aggregate amount of sales tax revenue that is required for distribution, and transfer that amount from the General Revenue Fund to the Revenue Sharing Trust Fund for Municipalities.
The Revenue Estimating Conference has not determined the fiscal impact to the state or local government as a result of this bill.
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Quick Response Training (QRT) grants, administered by Workforce Florida, provide funding for customized training to new or expanding businesses. Through this customer-driven program, Florida is able to effectively retain and attract businesses creating new high-quality jobs. QRT is proposed at $6 million in both the House and the Senate. However, the House and Senate propose different funding sources, so that difference will have to still be worked out.