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Issue 19: July 7, 2008
Topic 1: Gaming Compact
Having helped to negotiate the compact, let me see if I can call this one objectively. Here are the facts: shortly after Governor Crist was elected, the Department of Interior notified the Crist Transition Team that the new administration would be required to negotiate a compact (a contract between two sovereigns) with the Seminole Tribe of Florida to allow Class III gaming (Las Vegas style) on its reservation properties. After several months of negotiations, and continued warnings from the Department of Interior, Governor Crist signed a compact last November.
The compact gave the tribe exclusive rights to operate slot machines and banked card games (games against the house, e.g., black jack). In return, the state limited gaming to the Seminole's existing seven facilities, entered into a profit sharing agreement that would have garnered billions of dollars over the twenty-five year life of the agreement, and ensured consumer protection by allowing the state to monitor the tribe's gaming operations. The agreement came after 16 years of failed negotiations and just as the Department of the Interior was about to approve slot machines without profit sharing or oversight by the state.
The Governor's Office briefed the House and Senate during the negotiations, and neither body's leadership voiced objection until the agreement was nearly completed. After the compact was announced, House Speaker Marco Rubio brought suit against Governor Crist, alleging the Governor did not have the authority to enter into this type of agreement without the approval of the Florida Legislature. The Florida Senate filed an amicus brief in support of the House of Representatives. Interestingly, bills were filed in both chambers to ratify the compact this past legislative session. Neither measure was taken up.
Last week, the Florida Supreme Court ruled on the case, and held the Governor does not have the constitutional authority to bind the state to a gaming compact that legalizes types of gaming (banked card games) that are illegal everywhere else in the state.
Five justices joined Justice Cantero in the majority, Chief Justice Quince and Justice Lewis concurred with the result only. Justice Lewis agreed that the Governor may not bind the state when dealing with issues that conflict with state law, but noted that the legislature's failure to act could be argued to justify the Governor's actions as "necessary" under the Constitution.
Bottom Line: It would have been a dereliction of duty for the Governor not to enter into the compact when the federal government was threatening to give the Seminoles slot machines without revenues flowing to the state. As for the court's decision, reservation land is not state land. State laws on gaming do not apply to reservation land any more than Florida's laws apply in Georgia. Accordingly, negotiating pursuant to federal authority to allow banked card games on reservation land via compact does not violate the legislature's authority. Put simply, the legislative body with authority over the subject is the U.S. Congress, not the Florida Legislature.
The opinion reveals a larger legal issue that will likely be resolved in federal court. If the compact is ultimately defeated, Speaker Rubio may have created a perfect storm. The Seminoles will get slot machines without having to share revenue. That competitive advantage will bolster the arguments of pari-mutuels statewide that they should be allowed to offer slot machines. The result, what opponents of the compact claimed they wanted to prevent, will be a viral spread of gambling statewide.
Topic 2: Powerball
Although hundreds of millions of dollars in education funding from the Seminole Compact will be significantly delayed or maybe denied, solace can be taken in last week's announcement that the Florida Lottery will begin to offer Powerball in 2009. Joining Powerball is expected to generate millions for education and increase lottery commissions for over 13,000 Florida businesses that currently sell Florida Lottery products. Currently, Florida is the only state lottery that does not participate in the multi-state lottery game.
In order to offer Powerball, the Florida Lottery joined the Multi-State Lottery Association (MUSL), which currently operates Powerball and various other games in 29 states, Washington, D.C., and the U.S. Virgin Islands. The association is administered by the lottery directors for each member lottery.
Floridians purchase more $4 billion in Lottery products each year. Since Floridians voted overwhelmingly in favor of the creation of the Florida Lottery by passing a constitutional amendment in 1986, the agency has transferred more than $18 million to the Educational Enhancement Trust Fund. Next year the lottery is projected to generate an unprecedented $1.32 billion in education funding.
Bottom Line: Joining Powerball makes sense. If Florida is going to have a lottery, it should offer the games that generate the most money for education.
Topic 3: CAT Fund
Last week the State Board of Administration (SBA) entered into an agreement with Berkshire Hathaway (Warren Buffet's company) to secure $4 billion in bond financing that would provide immediate cash in the event of a major disaster this hurricane season. The SBA will utilize $224 million from Florida's Hurricane Catastrophe Fund (CAT Fund) to pay for $4-billion in bonds if the CAT Fund faces claims of more than $25-billion this hurricane season.
The CAT Fund works as reinsurance for insurance companies. A catastrophic storm, or a series of storms, could put the fund at risk and require assessments that could cost Florida policy holders of nearly all types. The Berkshire deal reduces some of the risk at the top end of the state's exposure.
Bottom Line: While expensive, the SBA was right to purchase this bond financing option. With the reforms passed in January of 2007 to lower property insurance rates, the state has increased its exposure and state leaders are wise to secure pre-event financing in this extraordinarily difficult credit market.
Topic 4: Travel to Cuba
On June 23, 2008, Governor Crist signed into law Senate Bill 1310, legislation that requires travel companies to post a bond of $250,000 and pay a $2,500 annual fee in order to offer tourist related services from Florida to Cuba, Iran, North Korea, Sudan or Syria.
The legislation was set to take effect on July 1, 2008, before a ruling in U.S. District Court last week that delayed implementation until July 11, pending further review of the new law's constitutionality. The delay came when sixteen Miami-based travel agencies field suit against the Department of Agriculture and Consumer Services alleging that the new law unfairly discriminates against agencies who specialize in trips to Cuba as Florida airports do not currently offer direct of flights to Iran, North Korea, Sudan or Syria.
Bottom Line: Proponents of the law argue it is a homeland security measure that protects the state in the event of an incident related to the unstable nature of these countries. Realistically, the law is politically calculated to stop travel to these challenged states. Travel to foreign countries from the United States falls within the federal government's jurisdiction, and is therefore, beyond the reach of a state like Florida. Look for the federal court to come to that conclusion.
Topic 5: Better for Business
Governor Crist signed legislation last week to streamline regulations administered by the Department of Business and Professional Regulation (DBPR).
Federally registered farm labor contractors, for example, will no longer be required to undergo a full background check, as a similar background check is already required by the federal government. The legislation also decreases application time for electrical contractors by removing a pre-qualification requirement. Contractors can now apply for a license as soon as they pass a licensing exam. Claims of fraudulent land sales will now be forwarded directly to law enforcement, rather than falling under DBPR's Division of Land Sales, Condominiums and Mobile Homes.
Bottom Line: This is the right time to review regulations on working Floridians. With Floridians facing higher unemployment numbers, it makes sense to streamline requirements for professional licenses. Many of the licensing hurdles administered by DPBR were put in place by special interest groups looking to bar entry into a licensed profession in order to increase prices charged by already licensed members. Unmanageable restrictions and government bureaucracy stifle entrepreneurship that, if cultivated, can result in business expansion, development, and job creation.
Question of the Week
Workplace Texting
Is it true that the Ninth Circuit Court of Appeals recently ruled that an employer cannot access text messages sent and received by employees on employer-provided electronic devices?
Click here to read more.
Things to Watch
No Guns at Disney
According to an internal memo obtained by the Orlando Sentinel last week, Disney maintains that its properties are exempt from the law that took effect last week allowing employees with concealed weapons licenses to leave their firearms in a locked vehicle on company property. The Guns to Work Law contains an exemption for companies who hold a federal permit to use, store or move explosives. Disney holds such a permit for fireworks shows.
Ethanol at Turkey Lake
The more than half a million flex-fuel vehicles on Florida's highways will have a few more places to fuel up later this summer. Governor Crist announced last week that the Florida Turnpike's Turley Lake service station in Central Florida now offers E85 ethanol. Later in the summer, stations in Port St. Lucie/Ft. Pierce as well as Pompano will also offer ethanol. Prior to last week's announcement, only Tallahassee and Miami offered E85 fueling stations.
Tight Timetable for CSX Project
Advocates for the CSX Rail project to divert freight traffic from the Orlando Metro Area towards Polk County in favor of a commuter rail in Orlando may have only one more regular session or a special session to convince legislators of the project's merit. The money for the project is still in the transportation budget, but declining state revenues could make sustaining that funding difficult. Additionally, the legislature must agree that the state will assume liability for the tracks before the deal expires in 2009. The liability provision ended the project's run in the final days of the 2008 Legislative Session. Proponents argue that 20 other communities around the country have accepted similar provisions.
Florida Forever Until 2018
Governor Crist signed legislation this week that will extend the Florida Forever program until 2018. Since July 2001, the program has protected over 535,643 acres of land and is the world's largest conservation land buying program.
