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Issue 14: May 26, 2008
Topic 1: Health Care Package Becomes Law
Last week, Governor Crist signed into law three pieces of legislation to expand access and affordability of health care in Florida.
CON Reform
Monday, the Governor signed legislation that streamlines the process for the approval of new hospitals, by improving the Certificate of Need process for all acute care hospitals.
Autism Coverage
Tuesday, Governor Crist signed legislation to increase coverage for autism spectrum disorders. Under the new law, the Office of Insurance Regulation will convene a workgroup to negotiate a developmental disabilities coverage compact between insurance companies and carriers. The compact will include, among other services, increased coverage for occupational, speech, physical therapies and penalties for denial of claims for medically necessary services due to the presence of a developmental disability. The legislation also creates a mandated benefit for autism and developmental disability therapies, which will apply to any carrier that does not comply with the compact by April 1, 2010.
Cover Florida
Wednesday, Governor Crist signed the Cover Florida plan, legislation to provide health insurance options for nearly $4 million uninsured Floridians. The plan leverages competition in the existing market by partnering with private insurance companies that will create and bid on innovative health insurance products. These products will be designed to be $150 per month or less, and will cover a range of primary and emergency services. Cover Florida is voluntary, with no mandates on individuals or on employers to participate. The plan is designed to focus on primary and preventive care to discourage unnecessary and costly visits to the emergency room.
Bottom Line: The health reforms passed during the 2008 Legislative Session provide a market-based approach to creating greater opportunities for Floridians to access affordable health care. In a year of limited resources, these reforms maximize consumer choice with a minimal use of tax dollars.
Topic 2: Increased Innovation Investment
Governor Crist visited the New York Stock Exchange last week to sign a bill that increases Florida's ability to invest in innovation technology in Florida.
The new law allows 1.95 billion from the State Board of Administration's (SBA) total pension fund assets to be invested in technology and growth, including aerospace and aviation engineering, renewable energy, and medical and life sciences. The new investments equal 1.5 percent of the $130.2 billion pension fund.
Additionally, the legislation doubles the amount of the SBA fund currently allocated for alternative investment from five to 10 percent ($9.2 to $18.4 Billion). Alternative investments are made in a private equity funds, venture capital funds, hedge funds, distress funds, or a direct investment in a portfolio company through an investment manager.
The Governor's Office predicts these increased state investments will encourage and even incentivize firms to increase their own investments.
Bottom Line: Increased investment in innovation technology is good for Florida. These investments encourage companies to locate and expand in the Sunshine State, increasing the number of high-wage, high-value, and high-skill jobs available. This legislation is especially important in a struggling economy where the non-agricultural job rate is slower than the national average.
Topic 3: Commodities Bubble/Continuing Consumer Distress
The Daily Business Review noted that the rate of mortgage delinquencies is not isolated in real estate as consumer credit delinquencies have spread across the board to car loans and credit card bills. The American Bankers Association's (ABA) Consumer Credit Delinquency Bulletin listed consumer credit delinquencies in the fourth quarter of 2007 at the highest levels since 1992, with the ABA's chief economist attributing the increase to economic downturn and particularly the job market.
Likewise, Daniel Mudd, president of CEO of Fannie Mae, the nation's largest buyer and guarantor of home mortgages, told USA today that the company is looking to expand as he believes home prices will continue to fall, decreasing twenty five percent before it's all said and done. This comes as federal lawmakers debate a plan to provide mortgage assistance to nearly half a million homeowners.
While states like Florida, are implementing public policy to invigorate the state's economy, job and housing markets, the rising costs of commodities makes these gains harder to come by. USA Today reported last week that commodities, defined as an agricultural or mining product that can be processed and resold, are the first growth industry of the 21st century. The problem is with a barrel of oil selling for double last year's rate and corn up 33 percent, the commodities bubble hurts across the board, but disproportionately affects the middle class and the poor.
Bottom Line: Rising food and energy prices prevent the economy from recovering in the short term. The weakness of the dollar exacerbates the problem as oil, corn and even gold set record prices against our declining currency. Good policy delivered by state government will help Florida recover but cannot succeed if our broader monetary policy allows the dollar to whither. A vastly weakened dollar also allows foreign companies to buy up American companies on the cheap (e.g, InBev's talk of taking over Anheuser Bush) and off-shore the management of American jobs – a very disturbing trend.
Topic 4: Supreme Court Appointments
At the end of last week, Justice Kenneth Bell announced his intent to retire from the Florida Supreme Court. Earlier this year, Justice Raoul Cantero made a similar announcement. Mandatory retirement at age 70 will necessitate the resignations of Justices Harry Lee Anstead and Charles Wells next year.
This period of transition among the top seven members of the state’s judiciary results in a unique opportunity for Governor Crist to appoint more than half of the Supreme Court in his first term.
In appointing Supreme Court Justices, the Governor must select from a group of candidates chosen by the nine-member Supreme Court Judicial Nominating Commission. Governor Crist has already appointed three of the nine members, and the terms of three additional members expire this summer, meaning by the time the Governor selects the state’s next Supreme Court Justice, he will have appointed two-thirds of the nominating commission.
Bottom Line: For the first time in anyone's memory, Governor Crist will appoint a majority of the Court in his first term. Compared to the salary and benefits packages for attorneys, even associates at major law firms, the compensation for Florida's Supreme Court is strikingly low. It is hard to expect younger lawyers with families, witness Justices Cantero and Bell, to seek the nomination to Florida's highest court. Look for the Governor and the Legislature to support better compensation for the Florida Supreme Court in order to attract and retain good candidates.
Topic 5: Voucher Challenge
The Florida Education Association's (FEA) governing board recently decided to file a suit in the Leon County Circuit Court to challenge two Constitutional Amendments relating to education vouchers placed on the ballot by the Taxation and Budget Reform Commission.
The Amendments in questions are Amendment 7 and Amendment 9. Amendment 7 would remove a provision that currently prohibits state funding for religious institutions. Amendment 9 would re-characterize the requirement for a "uniform efficient, safe secure, and high quality system of free public schools" as a "minimum," and not an exclusive duty of the state, coupled with another initiative to require that 65 percent of all school district funding be spent directly in the classroom. Both are aimed at overcoming rulings by the Florida Supreme Court that originally struck down Florida's voucher program.
With the possible passage of these amendments, eyes of the education community are likely to remain focused on the constitutional question surrounding school vouchers, especially as last week, Florida's northern neighbor passed the most comprehensive school choice program in the country. Under Georgia's new program, all K-12 students are eligible for state-funded vouchers to attend private schools, regardless of their demographic make-up or family income. Adding Georgia's program, there are now 23 school choice programs in 14 states plus the District of Columbia.
Bottom Line: In addition to the lawsuit, the FEA will mobilize its quarter of a million member union to campaign in opposition to these proposed amendments to Florida's Constitution. This grassroots effort is likely to have a significant impact on these measures which require 60 percent approval. The pro school choice movement will have to be equally well organized to convince the electorate to ensconce these measures in Florida's Constitution.
Thank You
Thanks to the more than 600 people who attended our three "LeMieux Report Live" presentations this week. For those of you who missed the presentations, we will be offering a video clip of the presentation at LeMieuxReport.com
later this week.
Question of the Week
The landmark 2008 Energy Legislation authorizes a "Cap and Trade" program to reduce greenhouse gases in Florida. What is a "Cap and Trade" program and how will it affect our economy and energy prices? Click here for the answer.
Things to Watch
Vulture Funds
The Daily Business Review reported last Friday that willing buyers, in the form of vulture funds, and willing sellers of condo developments are having difficulty closing deals due to the unwillingness of banks to let the developers off the hook.
Electric Cars
Nissan Motor Company and NEC Corp. announced last week that they will begin mass producing lithium-ion batteries next year, a key technology needed for electric cars. The two companies plan to invest $115 million in the project over the next three years to produce 65,000 units by 2011. Nissan and its partner Renault plan to offer an all-electric car in the U.S. and Japan in 2010 and globally in 2012.
Elected Judges?
Should judges be elected? The Sunday New York Times discusses the issue in an article entitled "Rendering Justice, With One Eye on Re-election".
Unusual Theme Park
Newsweek this week features what it calls "Florida's most unusual theme park", the Holyland Experience. The theme park recreates the ancient city of Jerusalem, a towering replica of Herod's Temple, as well as recreations of the Qumran caves (site of the Dead Sea Scrolls), the Garden Tomb of Jesus, the Wilderness Tabernacle with an Ark of the Covenant light and sound show and a Byzantine Scriptorium where tourists learn about the history of Bible production.
Better to Rent Than Own?
According to the Wall Street Journal, the Miami condo market presents a bargain for renters who are cashing in on homeowners and investment flippers struggling to sell their units.
New Nuclear
This week, Florida’s Public Service Commission considered a proposal by Progress Energy to build two nuclear facilities in Levy County. The plants would be operational by 2016 and 2017 and would power 1.3 million homes; however, as discussed in last week’s Lemieux Report, the rising cost of construction has made many parties reconsider the feasibility of such a large scale project. The PSC will make its decision in July.
