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Issue 11: May 5, 2008 – The 2008 Legislative Session in Review
Topic 1: What's In and What's Out
The sixty day 2008 legislative session is over with a flurry of activity in the final forty-eight hours. Here's what passed and what failed, and what's in and what's out of the 66.2 billion dollar state budget.
Affordable Housing
In – Affordable Housing Funding – $300 million for affordable housing, an increase from last year, includes down payment and closing cost assistance to encourage first-time home buyers. This allocation is projected to help over 2,200 Floridians purchase a home next year.
Out – Bed Tax – The Legislature voted against a provision that would allow parts of the Florida Keys to use a portion of resort tax to generate funding for affordable housing units. The proceeds were projected to produce $5 million per year for the project. The Tourism industry lobbied hard against the provision.
Business Regulation
In – Foreclosure Fraud Prevention – Increased disclosure requirements for foreclosure-related services were passed.
In – Annuity Regulation – Sellers who pressure the elderly to buy annuities they don't need or want will face increased penalties.
Out – Crane Regulation – A measure to require certification of cranes and crane operators failed.
Education
In – Amendment 1 Funding – While basic K-12 spending will drop by $131 per student, to $6,997, a cut of 1.8 percent, the budget sets aside $101.9 million for education funding affected by the property tax reform amendment passed in January.
In – College Tuition Increase – The 2008 Budget includes a 6 percent increase in tuition rates at state college and universities. University students will pay about $140 more a year for the standard 30 credit hours. For community college students, it will be about $92 more a year, or $118 if they are pursuing a bachelor's degree.
In – FCAT Reforms – Under legislation championed by Senator Gaetz, the FCAT will be deemphasized in high school grading counting only 50 percent, and FCAT exams will be given later in the school year.
In – End of Term Exams – End-of-course exams in high school to complement the FCAT will be established.
In – Curriculum Reform – "Next Generation" standards for all subject areas by 2011 will replace the Sunshine State Standards.
In – Certified Teacher Bonuses – Teachers who earn national board certification will continue to receive 10 percent bonuses, but an additional 10 percent for teachers who mentor others in the certification will not be continued. Also, the state no longer will pay 90 percent of the $2,500 application fee.
In – Merit Award Program – Florida's performance based bonus program for public school teachers, now in its second year, will continue to provide up to ten percent bonuses to the state's best educators. The funding was reduced to $32 million from an original allocation of $120 million.
In – Physical Education – Following the reintroduction of P.E. into elementary schools last year, the state will require middle schools to provide 30 minutes of PE weekly, although funding was not provided.
In – Vouchers – The corporate income tax credit scholarships that gives students tuition for private schools is expanded by $30 million.
In – Anti-bullying – Schools will be required to ban harassment of students.
Out – Class Size Flexibility – Legislation to give schools more flexibility to meet class-size requirements, and save school districts millions in compliance, failed.
Out – Critique of Evolution – A measure to require teachers to present critical analysis of evolution failed.
Out – Elected Education Commissioner – A proposed constitutional amendment to shrink the size and scope of the state university system governing board, override pending litigation as to whether the Legislature has the authority to set college tuition, and reinstate an elected education commissioner passed the Senate but died in the House.
Environment
In – Everglades Funding – The budget includes $50 million for the ongoing Everglades restoration project. While substantially less than last year, it was a win for the Governor who convinced House leaders to restore the funding after an original allocation of zero. The state has spent nearly $2.4 billion on the Everglades over the past seven years, with the Federal government contributing only about $360 million to what's supposed to be an equal partnership. This funding, though reduced, may help ensure the Federal government meets its matching commitment.
In – Florida Forever Funding – The state program for buying environmentally sensitive land was allocated $300 million, the same as in previous years.
In – Governor's Energy Plan – (see Topic 3 below)
Out – Growth Management Reform – The measure previously discussed in the LeMieux Report to make the process more transparent, and more development friendly, failed.
Health Care
In – Cover Florida Program for the uninsured and Hospital Reform – (See Topic 2).
In – Reserve Spending – An additional $55 million from the Lawton Chiles Endowment is allotted for health care for the medically needy and senior services.
In – KIDCARE – The state's subsidized health insurance program for children will see an increase of $13.4 million to cover an additional 38,000 children.
In – Hospice Funding for the Indigent – Medicaid coverage of hospice care will continue.
In – Autism Funding – Requiring insurers to cover children with autism.
Out – Nursing Home Funding – Nursing homes will see a $164 million rate reduction in funding for Medicaid residents, a 6.5 percent cut, and about $10 less per day per patient.
Out – New Abortion Restrictions – A proposal to require women seeking a first-trimester abortion to have an ultrasound and be offered an explanation of the images failed in the Senate on a tie vote of 20 for and 20 against in this session’s most dramatic moment.
Out – Mental Health Parity – An initiative to mandate benefits for mental illness match physical illness failed.
Insurance
In – Continued Rate Freeze for Citizens Insurance – (see Topic 4 below).
In – Enhancements to My Safe Florida Home – New provision for no-interest loans for homeowners to harden homes.
Out – Increased Rates by Private Insurers – The ban that prevents insurers to raise rates before approval by the Office of Insurance Regulation ("use and file") will continue through 2009.
Out – Dropped Policies – Insurers will now have to give notice before dropping more than 10,000 policies in a year.
Public Safety
In – Pay Raises for Highway Patrol – State Highway Patrol troopers will get a 5 percent pay increase. Starting pay for Florida's roughly 1,000 troopers is about $33,000.
In – Guns at Work – Chalk one up for the N.R.A. Employees with concealed weapons permits can leave guns in a locked car at work. The Governor has already signed this measure into law.
In – More DNA Testing – Expands list of offenders who must submit to testing – signed into law by the Governor.
In – Increased Penalties for Marijuana – It will now be a third-degree felony to own a house where marijuana is being cultivated.
Out – Funding for Prosecutors – Lawmakers cut spending for prosecutors. These cuts aggravate an already difficult situation for State Attorneys' Offices. Look for the legislature to address this issue when the budget recovers.
Out – Funding for Probation Officers – Budget cuts will eliminate the jobs of about 200 of Florida's 2,600 probation officers.
Taxes
In – New Fees – $110 Million in new fees, including many court fees.
Out – New Taxes – Legislators passed a balanced budget without raising taxes, also rejecting a proposal to tax goods bought over the internet.
Out – Highest and Best Use – The practice of taking commercial property for its potential "highest and best" use, instead of its current use, will be limited under a new law.
Out – Sales Tax Holiday – The usual one-week tax break on back-to-school supplies will not happen this year.
Out – Gas Tax Cut – The proposal to reduce gas taxes for a two-week period this summer failed to gain support.
Out – Hurricane Tax Holiday – The twelve-day tax break on hurricane preparedness items also failed in this tight budget year.
Out – Corporate Tax – The proposal to close an exception that allows multistate companies to avoid taxes by shifting income to out of state subsidiaries failed.
Transportation
In – Money for Transportation – $8 billion for transportation priorities, including highways, seaports, airports, rail and local government grant programs.
In – HOV for Hybrid Cars – Hybrids and low-emission or energy-efficient vehicles will be allowed in a high-occupancy lanes.
In – Toll Hikes – Local expressway authorities will have the option to index tolls to inflation every five years, but a measure to increase Florida Turnpike tolls 25 percent failed.
Out – CSX Commuter Rail – (See Topic 5)
Out – Leasing Alligator Alley – Senator Webster's proposal to lease the South Florida highway to the Lawton Chiles Endowment to generate $500-million for road construction failed.
Bottom Line: Faced with the most challenging budget year in anyone's memory, lawmakers were forced to make tough choices, and not everyone will be happy with the results. That said, the budget maintains Florida's pro-business environment, by keeping taxes low and providing for economic incentives, while providing as much money as possible for education and health care. The Florida Legislature accorded itself well in a difficult year.
More information on what passed and what did not this legislative session can be found in recent budget articles by the St. Pete Times and Bradenton Herald.
Topic 2: Healthcare Reform
The Florida Legislature last week passed comprehensive health care reform, including Governor Crist's plan to cover Florida's 3.8 million uninsured, and partially deregulating the process by which new hospitals expand services.
The Cover Florida Plan leverages competition in the existing market by challenging private insurance companies to create and bid on robust, innovative health insurance plans designed to cost $150 per month or less.
Companies compete to cover Florida's uninsured population by developing health care plans that focus on primary and preventative care, in order to discourage unnecessary and costly visits to the emergency room.
Additionally, the legislation creates the Florida Health Choices Corporation, an opportunity for businesses with less than 50 employees to choose from a variety of health care plans and services.
Approved Cover Florida plans would offer consumers a robust set of benefits, including – at the very least – coverage for preventive services, screenings, office visits, outpatient and inpatient surgery, urgent care, prescription drugs, durable medical equipment, and diabetic supplies.
The Certificate of Need (CON) process is a state regulatory process to which hospitals apply to expand services. Originally designed to promote efficiency in the health care system by preventing the duplication of services within a geographic area, the process has become, in the view of many, a hindrance rather than a help.
The newly passed legislation streamlines the CON process for certain hospitals, primarily those associated with emergency, and therefore often charity care. The new legislation encourages the creation of critical health facilities, increasing competition and efficiency in the health care marketplace and spurring economic development by providing a means for expenditures to focus on building hospitals rather than on the high cost of litigation.
Bottom Line: The Cover Florida Plan and CON Reform, both advanced by Governor Crist, aim at reforming the health care industry in Florida by developing a market-based business climate with increased competition resulting in expanded access to care. The Cover Florida Program drives insurance costs down for Floridians by reducing regulations on the private sector, which in turn makes health insurance more affordable.
The program is based on a free market framework with no mandates for individuals to carry health insurance or for employers to participate. CON reform, in turn, opens the market to more providers.
By championing no cost healthcare reform in a difficult year, Governor Crist did more than make lemonade out of lemons; he set forth a plan that has the potential to be a national model.
Topic 3: Energy Legislation
Ground breaking energy legislation passed through the Florida House and Senate last week. The legislation will make the Sunshine State a national leader in addressing climate change, guiding Florida to reduce greenhouse gases, increase energy efficiency and pursue more renewable and alternative energy sources.
Energy legislation passed last week will be implemented by the Florida Energy and Climate Commission. The group was created as part of the energy package and is tasked with centralizing state energy and climate change programs and policies in order to achieve more efficiency in the development of a long-term state energy policy.
The legislation provides for a reduction in greenhouse gas emissions by authorizing the Department of Environmental Protection to develop a cap-and-trade regulatory program. Through this provision, carbon emissions would be capped and utility companies would buy credits for exceeding the caps.
Additionally, the Public Service Commission will develop a portfolio standard that will move businesses towards more renewable forms of energy. Under this new legislation, ethanol must comprise 10 percent of Florida's fuel supply within the next two years and more focus will be placed on wind and solar.
Bottom Line: The New energy legislation provides a strategy for businesses to minimize negative environmental impacts by setting flexible and manageable benchmarks. By creating incentives to make the transition, Florida is leading the way in this global movement. Green technology stimulates our economy by attracting business to locate and expand in Florida and reduces our dependence on foreign oil. Along with his Cover Florida plan, Governor Crist's second big achievement this session is the passage of his energy agenda first articulated at last year's Serve to Preserve Conference.
Topic 4: Insurance Reform
The Homeowner's Bill of Rights passed the Florida Legislature this week as part of the property insurance reform package. The recommendations take a hard line against insurance companies, doubling maximum fines for insurers who violate state laws, extending to 2010 a provision that allows regulators to block rate hikes, bar insurers from using arbitrators if they disagree, and requiring insurers to use risk models that are approved by the state when calculating rates.
The new insurance legislation continues the rate freeze on Citizens Property Insurance, Florida's state-run insurance company, through January 2010. While detractors argued the rate freeze prevents insurers from doing business in Florida, supporters agreed that keeping the state-run insurer competitive with private companies encourages a free-market approach, more likely to stabilize Florida's insurance industry.
An additional facet of this session's insurance reform package takes $250 million set aside by Citizens for payment of claims to instead fund the Insurance Capital Build-Up Incentive Program to provide additional capital for start-up and newer insurance firms.
Bottom Line: The changes made last year to expand the CAT Fund and allow Citizens to compete have led to decreases of more than 15 percent statewide and more companies have entered Florida's insurance market, expanding choice for more Florida homeowners. While it was commendable to continue to encourage new insurance companies to the market, Citizens is still short on reserves, and therefore funding new companies out of the reserves is unwise. Citizens and the CAT Fund should continue to aggressively pursue reinsurance and liquidity options prior to the June 1 start of Hurricane Season.
Topic 5: Transportation Holdup
The highly debated proposal to divert freight traffic from the Orlando Metro Area towards Polk County in favor of a commuter rail failed to pass the Florida Senate last week.
Critics complained that the CSX project would have required the state to spend $649 million in construction costs, and assume liability for damages or injuries on the commuter rail, even if Jacksonville-based CSX's trains caused the harm. Proponents noted that despite an initial cost to the state, the measure would have provided important transportation alternatives, enhanced the environment and stimulated the economy, pumping a projected $1 billion into Florida. The project also had the potential to create 8,000 new jobs in and around Polk County and move trucks off Florida's overcrowded interstates – I-95, I-75 and I-4 – making more room for passenger cars.
Despite the efforts of retiring Senator Dan Webster, the proposal failed to reach passage on the last day of the 2008 session.
Bottom Line: While rumors that a special session will be set to deal with this issue are off base, commuter rail is important to Florida's future and the CSX proposal has time to resurface next year.
Question of the Week:
What is the best way to transfer part of my company to my children? My company has realized substantial growth since I started it, and I anticipate this will continue over the next few years. I hope to sell the company in the next three or four years, and I would like my children to benefit from the sale.
Click here for the answer…
Things to Watch
The upcoming 2008 Serve to Preserve Florida Summit on Global Climate Change was announced last week by Governor Crist. The conference will be held June 25-26, 2008, in Miami and will focus on stimulating economic development in clean technologies as well as "greening" Florida's business community.
Good for Business
Click here to read the Miami Herald's overview of the pro-business accomplishments of the 2008 Legislative Session.
Voter ID Law
The United States Supreme Court upheld a lower court's ruling on Indiana's voter identification law. The law requires voters to show a government issued voter identification card prior to casting a ballot, maintains that such identification will be provided free of charge for those who do not hold a valid driver’s license, and allows voters unable to produce valid identification the option of casting a provisional ballot.
Florida also has an identification requirement, though substantially less stringent than Indiana's. Floridians can cast a ballot with as little as student, neighborhood association, or retirement center identification. Following this court ruling, look for a more stringent voter identification law for Florida elections, especially given that Indiana's provision for free cards underlines the usual opposition point that voter ID laws disproportionately affect the underprivileged.
New Protections for Condo Owners
Governor Crist signed legislation that requires condo associations to provide 30 days notice before filing a lien against a unit owner. The new law also protects owners from association directors who have been charged with a felony, makes items easier to agenda for association meetings and makes meeting records more accessible to owners. Prior to passing the legislation, Florida House members heard the 96 page bill read in full during the session standoff detailed in last week's LeMieux Report.
Flight Time
Look for longer flight times this summer as fuel prices continue to rise. The Associated Press reported last week on airlines saving hundreds of thousands of dollars by increasing flight times by just a few minutes. For example, by increasing flight time by two minutes, JetBlue saves $13.6 million per year on fuel. Likewise, United Airlines is implementing new navigational software projected to save $20 million per year.
Follow Up - School Grade Formula
Last week the Florida House joined the Florida Senate in passing a plan to change the way the Florida Comprehensive Assessment Test (FCAT) is utilized to determine a school's ranking. Under the Senate plan FCAT student scores would be analyzed along with a high school's graduation rate, students' performances and participation in advanced courses as well as SAT and ACT scores.
