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Issue 7: April 7, 2008
Topic 1: Florida Ranked #2 for Business
Last week the annual Pollina Corporate study ranked Florida the number two pro-business state in the nation, trailing only North Carolina. The comprehensive ranking examines twenty-nine factors in two groupings, or stages, relative to states’ efforts to support a pro-business climate. The study is limited to factors over which state government has control. According to its authors, the list therefore “reflects state leadership that truly understands the importance of producing the best job opportunities available for their constituents.”
Stage I, Labor, Taxes and Other Factors is based on 14 components, including taxes, human resources, right-to-work legislation, energy costs, infrastructure spending, workers compensation legislation, and jobs lost or gained. Stage II rates 14 factors based on incentive programs and state economic development departments.
Last year Florida ranked third overall, but was one of seven states that did not make the top ten for Stage II. The study noted that with improvements in Stage II factors, states substantially improve their ability to attract and retain high-quality and high paying jobs. The proof is in the pudding here in Florida where the pro-business ranking increased from seventeenth in 2004 to second in 2008.
Bottom Line: Florida’s low tax environment and expansion of innovation incentives has significantly impacted the overall business climate. The commitment to maintain low taxes and attract new businesses must remain even in difficult budget times.
Topic 2: Education’s Report Card
Florida's business climate was not alone in receiving national accolades last week. Florida’s Middle School System was invited to participate in the prestigious Schools to Watch program, and Florida's eighth graders moved the Sunshine State to ninth place in the National Assessment of Educational Progress (NEAP) writing assessment, a nationally recognized measurement of writing performance known as the Nation's Report Card.
The Nation’s Report Card also revealed that Florida’s Hispanic students rank second nationwide in the number of Hispanic students who scored proficient or above on the 2007 writing assessment. Florida’s African American students scored fourth among their peers in other states.
Florida has moved up 16 places since 1998, the greatest increase of any state who participated in the assessment in both 1998 and 2007. The National Center for Education Statistics oversees the congressionally mandated program that measures the writing and math skills of fourth, eighth and twelfth graders.
Bottom Line: Prestigious national rankings bring confidence that Florida educators and students are on the right track. The business community reaps the benefits in a qualified Florida-grown workforce ready to compete and lead in the global economy.
Topic 3: Court Rules Against Allstate
The First Circuit Court of Appeals ruled that the Office of Insurance Regulation (OIR) has the right to suspend Allstate Insurance Company from conducting new business in Florida, overturning a stay requested by the insurance company in a case where the company failed to provide documents during a state investigation. The prohibition extends beyond home insurance policies preventing Allstate's 1,100 agents in Florida from selling any of the company’s products, from boat and car insurance to life and property.
Governor Crist and Senate President-Designate Jeff Atwater praised the court’s ruling as an important step towards increasing consumer protection in the insurance industry and underscoring state government’s commitment to reduce property insurance rates.
In October of 2007, Allstate was issued a subpoena for documents in a state investigation aimed at uncovering why the company’s rates had not dropped following the insurance reforms passed in early 2007. In January of 2008, OIR suspended Allstate’s ability to write insurance policies in the state, but the company was able to continue writing policies pending last week’s ruling. The ruling does not affect existing polices, only the company’s ability to issue new policies.
Bottom Line: Allstate owes it to its policy holders and agents to come to an agreement with OIR on the production of documents requested. A failure to do so is in neither Florida nor the company’s best interest.
Topic 4: Space - The Final Shuttle Years
The space shuttle is currently set to retire in 2010 in favor of a new space exploration program called Constellation, scheduled to begin flying in 2015. Economic concerns surrounding the transition were raised last week as the Kennedy Space Center issued a report estimating the loss of over 6,000 jobs when the space shuttle program ends.
The Constellation program is estimated to need only 2,300 of the 8,000 high-wage, high-value jobs currently utilized by the space shuttle program. Governor Crist this week announced that Space Florida, the state’s public private partnership for space- related economic growth, will work to attract commercial space companies to Florida in an effort to retain these highly skilled aerospace employees.
The Governor noted that Space Florida is aggressively pursuing more than 50 space-related firms for the commercial market as Florida focuses on maintaining its status as a front runner in the civil, military and commercial aerospace industry. Companies include Bigelow Aerospace, XCOR, Rocketplane Corporation and one of the competing teams for the Google Lunar X Prize. Additionally, last week the Senate Commerce Committee unanimously passed a series of bills aimed at revitalizing the Space Industry.
While Florida focused on retaining aerospace jobs in the transition from shuttle to the Constellation, the Government Accountably Office (GAO) this week addressed serious concerns regarding the viability of the new Constellation program. The report critically addresses NASA’s plan to launch Constellation in 2015, and return astronauts to the moon by 2020, citing a list of problems, including the Ares I rocket, which the report finds prone to violent shaking on liftoff and potentially underpowered to reach orbit with a capsule full of astronauts.
According to GAO, the whole project is faced with “considerable unknowns” that make it doubtful whether NASA’s request for an additional $2 billion during the next two years will be enough to overcome design flaws and speed its development for a first liftoff before 2015.
NASA maintains that the program is on track and any setbacks are typical of the aerospace development process. The issue is becoming increasingly political due to the increased need for funding to keep the program on track at a time when state and federal budgets are tight.
Bottom Line: Despite these current challenges, the space program has a history of overcoming budget, scientific and political setbacks. Florida is the foundation of America’s dominance in the space program. Coupled with new economic possibilities in the commercial market, it is hard to imagine America’s space program will not once again defy odds and successfully transition to the next phrase of space exploration.
Topic 5: TBRC Update
Florida’s powerful Taxation and Budget Reform Commission (TBRC) held an all-day meeting on Friday, voting against a proposal aimed at reviving Florida’s school voucher program.
As noted in last week’s LeMieux Report, the TBRC recently voted to place a constitutional amendment on the November ballot that would eliminate the Blaine Amendment, utilized by Florida’s Supreme Court to invalidate the Opportunity Scholarship Program which provided vouchers for students in failing public schools to attend private schools, including schools with a religious affiliation. On Friday, the TBRC narrowly voted against a second constitutional amendment that would clarify the constitutional mandate requiring uniformity in public education – a measure school choice proponents hoped would moot a second constitutional challenge to the voucher program.
The commission also delayed a vote on the Taxpayer's Bill of Rights (TABOR), a constitutional amendment that would limit government revenue to population growth plus inflation. The TABOR proposal, heavily supported by the business lobby, was rescheduled for April 14th.
Bottom Line: To date, the TBRC has voted to place seven constitutional amendments on the ballot this November. Whether or not meaningful reform will result from the commission, constitutionally convened every 20 years, is yet to be seen. The final verdict will be left to Florida voters in November as the work of the TBRC will conclude on May 2nd.
Question of the Week
There is a rumor that legislation is being considered that might prohibit private clubs in residential communities from collecting mandatory club membership fees. Is the rumor true?
Things to Watch
The debate over whether or not Florida’s Democrat delegation will be seated at the Party’s Denver Convention waged on last week, though this time outside of the courthouse. Florida Democrat Party officials met with Democrat National Committee (DNC) leaders in Washington, D.C. and agreed that Florida will be represented at the convention. The question of how remains unanswered. The next big primary is April 22 in Pennsylvania. Despite resolutions made this weekend to end the delegate dispute, if the Democrats fail to secure a mathematical nominee in Pennsylvania look for the issue to return to litigation, especially given the most recent dismissal by the 11th U.S Circuit Court of Appeals. The suit alleged violation of constitutional rights if the DNC failed to seat Florida's delegation, but the suit was filed before the January 29th Primary, so dismissal was based on standing, leaving the question of equal protection rights in a primary election unanswered. The 11th Circuit's decision can be read as inviting a reexamination of the underlying constitutional issues.
On the Republican side, Senator John McCain noted his deep personal ties to the Sunshine State last week campaigning in Pensacola and Jacksonville as part of his "Service to America Tour."
As state lawmakers mull over next year's budget, members of Florida's Congressional Delegation signed a letter to Speaker Rubio and other Florida leaders advising against proposals to cut funding for Everglades Restoration, stating that failure to support continued state funding would “undermine the ability to secure federal funding now and in the future.” To date, Florida has invested $2 billion in the Comprehensive Everglades Restoration Plan, a 50-50 cost share approved by Congress in 2000. The federal government has invested hundreds of millions, but remains far from keeping up its end of the bargain.
Changes are coming to the Daytona Beach News Journal, as the family owned News-Journal Corporation must decide whether to dissolve or pay $129.2 million to Atlanta's Cox Enterprises, which currently owns 47.5 percent of the paper. The next stop is the U.S. District Court in Orlando.
