Florida Government and Politics Weekly Update

20 April 2009 Publication
Authors: Robert H. Hosay Thomas J. Maida

Public Affairs News Alert

Economy: Florida’s Unemployment Rate Grows Again in March, but Shows Signs of Leveling Off
On April 17, 2009, the Florida Agency for Workforce Innovation announced that the state's seasonally adjusted unemployment rate for March 2009 was 9.7 percent, with 893,000 jobless out of a total workforce of 9.2 million. The March unemployment rate was 0.1 percentage point higher than the revised February 2009 state unemployment rate of 9.6 percent and 4.3 percentage points higher than the March 2008 state unemployment rate.

The March 2009 unemployment rate equals the unemployment rate for January, February, and March 1976, which was Florida’s highest unemployment rate using the current measurement methodology. Under the previous methodology for calculating unemployment, the state’s peak level was 11.9 percent in May 1975.

The March data may indicate that unemployment is leveling off. The increase of only 0.1 percentage point over the prior month could represent an improvement over January and February 2009. The unemployment rates for those months were one percentage point and 0.6 percentage point, respectively, above the prior month’s unemployment rates. The March unemployment rate also represents a narrowing of the gap between the state and national unemployment rates. In March, the Florida rate was 1.2 percentage points above the national unemployment rate of 8.5 percent. Florida’s February 2009 unemployment rate was 1.3 percentage points above the national rate.

Continuing current trends, the counties with the lowest March unemployment rates were Liberty (5.2 percent), Alachua (6.1 percent), Monroe (6.1 percent), Leon (6.2 percent), Jackson (6.7 percent), Franklin (6.8 percent), and Wakulla (6.8 percent). The counties with the highest unemployment rates were Flagler (14.3 percent), Hernando (12.9 percent), St. Lucie (12.8 percent), Lee (12.2 percent), Marion (12.2 percent), and Indian River (12.0 percent). Twenty-six counties had unemployment rates of 10 percent or higher.

Legislature: House and Senate to Start Formal Budget Negotiations
House and Senate budget negotiators were scheduled to begin the formal budget conference process on April 20, 2009, but that meeting has been canceled, apparently because the two chambers have not agreed on the total amount of revenues available for the 2009 – 2010 fiscal year.

After relatively little debate, the full Senate passed its $65.6 billion appropriations bill by a unanimous 39-0 vote on April 16, 2009. The House passed its budget, which spends $549 million less than the Senate budget, on April 17, 2009 after two days of contentious questions and debate. The House plan passed on a party-line 74-45 vote.

The Senate plan is based on $1 billion in new revenue from an increase in tobacco taxes and new revenues from an expansion of gaming. The House budget relies more heavily on fee increases and transfers from state trust funds than the Senate version. The House plan also makes more dramatic cuts in higher education funding and cuts salaries of most state employees by four to five percent.

If the budget negotiators follow their tentative schedule for conference committee meetings, issues that cannot be resolved by the conferees will be “bumped up” to Senate President Jeff Atwater (R-North Palm Beach) and House Speaker Larry Cretul (R-Ocala) on Sunday, April 26, 2009.

Politics: Former House Speaker Sansom Indicted
On April 17, 2009, a Leon County grand jury indicted former House Speaker (and current state Representative) Ray Sansom (R-Destin) and Northwest Florida State College President Bob Richburg on charges of official misconduct and perjury.

The grand jury charged that Rep. Sansom used his position as House budget chairman to falsify the state budget for corrupt purposes by inserting an appropriation for a Northwest Florida State College building at the Destin airport that would in practice be used by a political contributor for private purposes and that he lied to the grand jury in describing the airport building.

The grand jury investigation, which began in January 2009, was prompted by a series of newspaper reports about Rep. Sansom’s efforts to provide funding for the college and his $110,000-a-year job at the college, which, in an apparent coincidence, began on the same day as he was sworn in as House Speaker. Rep. Sansom resigned from the job at the college on January 5, 2009 and resigned the House speakership on January 30, 2009.

The grand jury report was highly critical of the state budget process and the power vested in House and Senate leaders. The report described the process as giving “unbridled discretion to the president of the Senate, speaker of the House of Representatives and the appropriations chairmen,” and stated that the lack of transparency “allows taxpayer money to be budgeted for special purposes by those few legislators who happen to be in a position of power.”

Property Insurance: Potential Florida Hurricane Catastrophe Fund Shortfall May Be Smaller Than Originally Thought
In a presentation to Governor Charlie Crist, State Chief Financial Officer Alex Sink, State Attorney General Bill McCollum, and State Board of Administration (SBA) Executive Director Ash Williams reported that improvements in credit markets had reduced the potential shortfall in the Florida Hurricane Catastrophe Fund (FHCF) by approximately $5 billion.

The FHCF provides reinsurance that covers some of the losses of residential property insurers after a major hurricane. The FHCF is supported in large part by its ability to incur debt and levy assessments on property and casualty insurance policies to cover its debts. It provides a “basic layer” that promises to pay up to $17 billion in coverage. In an effort to reduce homeowners’ insurance premiums, the Legislature in 2007 created another layer of coverage that promises to pay up to an additional $12 billion (known as the Temporary Increase in Coverage Limits (TICL) layer). The reinsurance provided by the FHCF is much less costly than other reinsurance, but the global financial meltdown has raised doubts about the fund’s ability to meet its obligations.

In late 2008, the fund calculated that it could not honor more than $10.5 billion of its potential obligations, leaving a shortfall of $18.5 billion. Based on the new analysis of the credit markets, the fund could find buyers for bond issues of up to $8 billion, almost eliminating the shortfall in the $17 billion basic layer of FHCF coverage, but leaving a shortfall in all of the $12 billion TICL layer.

Legislation that would gradually reduce the size of the additional layer of FHCF and also would gradually increase the rates charged by the state-created Citizens Property Insurance Corp. passed the Senate Committee on Ways and Means on April 17, 2009. Similar legislation is awaiting consideration by the full House of Representatives.

Public Affairs News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this alert or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals:

Marnie George
Tallahassee, Florida

Michael P. Harrell
Tallahassee, Florida

Robert H. Hosay
Tallahassee, Florida

Jonathan P. Kilman
Orlando, Florida

Thomas J. Maida
Tallahassee, Florida

Leonard E. Schulte
Tallahassee, Florida

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