Economic incentives are important to Florida. I hope you don't mind if I disagree with some of my friends -- and some who don't call me friend -- who continue to label these incentives "corporate welfare."
Rep. Mark Pafford, D-West Palm Beach, was quoted in a News Service of Florida story saying, "It's an easy argument to make that the governor is basically handing cash away to his big corporate buddies and he's literally stomping people into the ground who need it the most. If you're in the tea party and concerned about responsibility, the governor is not offering that."
That's certainly not my view. Florida has taken a giant leap forward since 2010. Its reputation as a state moving up economically and influentially, providing a better future for its citizens today than it did before Gov. Rick Scott came along, has been regaled in media across the country since the last presidential election. Economic incentives is nothing more than a cost of a state's doing business today. It's one of the tools the governor has used to make good things happen to the Florida economy.
In fact, in December, House Finance & Tax Chairman Matt Gaetz, R-Shalimar, said it all better than I could, after Scott appeared before Gaetz's committee to promote his $250 million budget request for economic incentives.
"We're in a real economic sweet spot," said Gaetz. "We keep cutting taxes, and the economy keeps growing. If we can continue to do that, we'll have the resources to care for the vulnerable, to keep cutting taxes and to be the best state in the country to raise a family, to have a job and achieve the highest level of one's opportunity."
In fact, state economists acknowledge that the $250 million Scott wants is covered with budget surplus. They have projected that about two-thirds of an estimated $635.4 million surplus for the upcoming 2016-2017 budget year will come from one-time, non-recurring money. They have also predicted that the surplus will drop to $583.7 million the following year and $222.2 million the year after that, due in part to the continuing cost of recent tax cuts.
Incidentally, with his 2016 budget request for the Enterprise Florida economic incentive program, Scott is actually following Florida law. He is acting on economic development legislation passed in 2011 "to create jobs for Florida families, increase capital investment in our communities and provide a significant return on the investment made by the state's taxpayers."
Some of the industries Florida has targeted for recruiting include aviation and aerospace, biotech and life sciences, and advanced manufacturing and trade and logistics. In 2014, a Florida Chamber of Commerce study showed for every dollar invested in the targeted industry program (QTI), taxpayers earn $6.40 to $6.90 in returns.
Can the incentives program be tweaked to eliminate companies that make promises, take our money, then bail out before they've created a single job? Of course. As a matter of fact, the state has taken aggressive action to pin down bad actors and ensure they are prosecuted to the full extent of the law, where laws are found to be violated.
Projects recommended to receive money already are facing a more exacting review on the front end than they were two and three years ago. The House and Senate, the program's gatekeeper, are fully engaged in reform as I speak.
During the last legislative session, Scott wanted $85 million to compete with other states to create jobs, the centerpiece of his agenda. The Legislature approved $43 million plus $10 million to market Florida as a premier destination for firms looking to move or expand.
This was a step backward. Even Eric Silagy, chief executive of the state's biggest utility, Florida Power & Light, told The Tampa Bay Times the message in other states is that because of the Legislature, "Florida is on the brink of being closed for business."
Scott included major reforms with his budget request -- reforms he claims will do away with the state’s nearly bankrupt Quick Action Closing Fund, create a new $250 million Florida Enterprise Fund, and make it a new trust fund where incentive dollars will remain untouched in the state treasury until companies under job creation contracts meet their job requirements. It will allow the state’s investment to accrue more interest than the current escrow account.
On top of that, Scott proposes the authorization for the Florida Enterprise Fund be streamlined by requiring that any deal needing more than $1 million have the approval of the speaker of the House and the president of the Senate, as well as the governor, eliminating the need to schedule special committee meetings.
Scott also suggests a reform on the return on investment requirements of the funding dedicated to competitive jobs projects, requiring a 10 percent annualized return on top of the original amount invested in a company -- no special waivers.
Legislative leaders agree on the benefits of economic incentives to Florida and say they are trying to work with the governor. But neither chamber, each dealing with competing priorities, is likely to give him everything he wants. But it's good to hear there's talk of reform and compromise on both sides.
Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. Twitter: @NancyLBSmith
