Florida Government and Politics Weekly Update

Legislature: Organization Session
The Florida Senate and House of Representatives elected their presiding officers and party leaders for the 2008 – 2010 biennium at a November 18, 2008 Organization Session. The new Senate leaders are:

• President: Sen. Jeff Atwater (R-North Palm Beach)
• President Pro Tempore: Sen. Mike Fasano (R-New Port Richey)
• Democratic (Minority) Leader: Sen. Alfred “Al” Lawson, Jr. (D-Tallahassee)
• Democratic (Minority) Leader Pro Tempore: Sen. Charlie Justice (D-St. Petersburg)

The new leaders of the House of Representatives are:

• Speaker: Rep. Ray Sansom (R-Fort Walton Beach)
• Speaker Pro Tempore: Rep. Larry Cretul (R-Ocala)
• Republican (Majority) Leader: Rep. Adam Hasner (R-Delray Beach)
• Democratic (Minority) Leader: Rep. Franklin Sands (D-Plantation)
• Democratic (Minority) Leader Pro Tempore: Rep. Geraldine F. Thompson (D-Orlando)

The two chambers also adopted their rules for the 2008 – 2010 biennium. The new House rules include a return to a committee structure in which substantive law committees are not involved in appropriations issues. The new Senate rules give the Senate President the discretion to determine the committee structure.

Legislative committees from both chambers will meet in Tallahassee during the week of December 8, 2008.

State Budget: Consensus Revenue Estimating Conference Projects $2.14 Billion State Deficit
On November 21, 2008, the Consensus Revenue Estimating Conference, composed of economists from the Legislature, the governor’s office, and the state Department of Revenue, determined that Florida’s current-year budget deficit is $2.14 billion. The new deficit estimate, which is more than $700 million higher than the deficit based upon projections from the August 2008 Consensus Revenue Estimating Conference, has led to increased discussion of a special legislative session to address budget issues and tax increases. Under the state constitutional requirement of a balanced budget, the deficit must be eliminated by June 30, 2009, the end of the state fiscal year.

The Legislative Budget Commission has already transferred $672 million from the state Budget Stabilization (“Rainy-Day”) Fund to the General Revenue Fund and has authorized borrowing from other funds. Governor Crist has already ordered state agencies to hold back four percent of their budgeted funds. But the new deficit estimate raises the possibility that these actions will not be sufficient to eliminate the deficit, and that action might be required before the regular session of the Legislature convenes on March 3, 2009. Borrowing from the tobacco settlement-funded Lawton Chiles Endowment is possible, but withdrawals and investment declines have reduced the value of the endowment to $1.1 billion, reflecting a loss of approximately $1 billion in the last six months. Further actions to cut the current-year budget or raise tax revenue would probably require legislative action.

After the Consensus Revenue Estimating Conference, Governor Crist stated that it was “not unlikely” that he would call a special legislative session to address the deficit. In a joint statement, Senate President Atwater and House Speaker Sansom said that “all options will be under consideration.”

Legislature: No Money for Local Projects
The presiding officers of the Legislature have, in effect, banned funding for lawmakers’ pet projects in the upcoming fiscal year. In a joint statement issued on November 18, 2008, Senate President Atwater and House Speaker Sansom announced that they would shut down the Community Budget Issue Request System (CBIRS) for the 2009-2010 fiscal year, effectively   The CBIRS process provided for vetting of individual legislators’ requests for local projects. In announcing the ban, the officers stated that the CBIRS process was being shut down because of the need to focus on solutions to balance the state budget and the need to “avoid creating unrealistic funding expectations in our communities.”

Taxation: Corporate Tax Glitch May Require Legislative Action
In the 2008 session, the Legislature enacted HB 5065 (Chapter 2008-206, Laws of Florida), which attempted to ensure that the Florida tax liability of a taxpayer was not reduced when the taxpayer took advantage of the accelerated depreciation provisions of the federal Economic Stimulus Act of 2008. In what is now widely acknowledged as a glitch, HB 5065 provided that a taxpayer who took advantage of the federal accelerated depreciation allowance would permanently lose 50 percent of the depreciation deduction on his/her state taxes. Legislative leaders have publicly stated their desire to address the glitch at the first opportunity available.

On Thursday, November 18, 2008, Department of Revenue Executive Director Linda Echeverri announced that the department would waive any taxpayer penalties resulting from the glitch. Appearing before the governor and cabinet, Executive Director Echeverri stated that she was taking the action based upon assurances from legislative leaders that they will pass a bill to correct the glitch no later than the regular legislation, which starts in March 2009.

Economy: Unemployment Hits 15-Year High
On November 21, 2008, the State of Florida Agency for Workforce Innovation announced that Florida’s seasonally adjusted unemployment rate for October 2008, was seven percent. October’s unemployment rate is the highest since December 1993. The October rate is 0.5 percentage points higher than the national unemployment rate for October, 0.4 percentage points higher than Florida’s unemployment rate in September 2008, and 2.7 percentage points higher than Florida’s unemployment rate in October 2007. The metropolitan statistical areas with the highest unemployment levels were Palm Coast, Punta Gorda, and Sebastian-Vero Beach. The areas with the lowest unemployment levels were Gainesville, Ft. Walton Beach-Crestview-Destin, and Tallahassee.

Economy: Tourism Declines 3.2 Percent in Third Quarter
On November 17, 2008, Visit Florida, the state’s tourism marketing corporation, announced that total visitors to Florida through July – September 2008 had declined by 3.2 percent compared with the same period in 2007. The decline represents a loss of 651,000 visitors. Year-to-date statistics for the first three quarters of 2008 indicate an overall increase of 0.9 percent in the number of visitors over the comparable period in 2007.

Politics: Governor Crist’s High Approval Ratings Continue
In a survey of Florida voters released November 18, 2008, the Quinnipiac University Polling Institute found that Governor Crist enjoyed a job approval rating of 68 percent, up seven percentage points from his approval rating in a September 8, 2008 survey.

Approval ratings for other Florida political figures did not come close to the governor’s rating. U.S. Sen. Bill Nelson (D-Fla.) and Republican State Attorney General Bill McCollum both had job approval ratings of 51 percent, U.S. Senator Mel Martinez (R-Fla.) had a 42-percent job approval rating, and the poll gave Democratic state Chief Financial Officer Alex Sink a job approval rating of 35 percent.

In another Quinnipiac survey, released on November 19, 2008, 47 percent of Florida voters were satisfied or somewhat satisfied with “the way Florida is going today,” and 53 percent were dissatisfied or somewhat dissatisfied. The economy was the most important issue facing Florida in the opinion of 50 percent of the voters surveyed. Taxes and education tied for the next-most-important issue, with eight percent each.

Environment: Potential Snags in State Buyout of United States Sugar Corporation Land
Two recent developments may threaten the state’s announced offer to aid Everglades restoration by buying 181,000 acres of land from United States Sugar Corporation (U.S. Sugar). for $1.34 billion. On November 18, 2008, the South Florida Water Management District posted a fairness opinion on the land purchase from independent financial advisor Duff & Phelps. The fairness opinion stated that the fair-market value of the land was $930 million. On November 20, 2008, the closely held Lawrence Group announced a hostile bid to buy U.S. Sugar for $300 a share. The Lawrence Group, which is based in Tennessee, operates farms in the South and the Midwest, including citrus groves in Florida. It has twice previously tried to acquire U.S. Sugar.

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 this topic further, please contact your Foley attorney or any of the following individuals: