Florida Government and Politics Weekly Update

Economy: As Unemployment Continues to Rise, State Economists Predict Recovery in 2010
For November 2008, Florida’s seasonally adjusted unemployment rate was 7.3 percent, the highest level in more than 15 years. According to the State of Florida, Agency for Workforce Innovation, the November rate exceeded the rate for the previous month by 0.3 of a percentage point and exceeded the unemployment rate for November 2007 by 2.9 percentage points. The Florida unemployment rate for November 2008 was 0.6 of a percentage point higher than the national level of 6.7 percent.

Florida lost 206,900 non-agricultural jobs in the 12 months ending in November 2008. The construction industry was responsible for 32.5 percent of the overall job losses. November employment data also reflected a year-over-year job loss in the tourism and hospitality industry for the first time in more than six years.

On December 17, 2009, the Florida House of Representatives met for a briefing on economic and budget issues. Amy Baker, Director of the Legislature’s Office of Economic & Demographic Research, told the House that the state’s unemployment rate could reach eight percent by the summer of 2009. She also noted that the state has a backlog of approximately 300,000 unsold homes, as compared with a typical supply of approximately 40,000 unsold homes. She predicted that the Florida economy would remain in recession until April 2010.

State Budget: Special Legislative Session in January 2009 Expected to Consider Budget Cuts and Other Means to Address the State Deficit
On December 15, 2008, Senate President Jeff Atwater (R-North Palm Beach) and House of Representatives Speaker Ray Sansom (R-Fort Walton Beach) announced that they intend to call a special legislative session for January 5 – 16, 2009 to address the state’s $2.29 billion current-year budget deficit. They have not yet issued the proclamation that will more specifically define the scope of the special session.

Statements from various legislative leaders during the week appear to rule out consideration of tax increases during the special session, but tax increases, including an increase of up to $1 per pack in cigarette taxes, are likely to be considered when the regular session of the Legislature convenes on March 3, 2009. Both Mr. Atwater and Mr. Sansom have stated that some fee increases may be considered in the January session.

According to a draft document obtained by newspapers, Governor Charlie Crist intends to propose to address the deficit with budget cuts, withdrawals from several state funds, and revenue from the as-yet-unapproved Seminole Tribe of Florida gaming compact. Specifically, the governor is expected to propose:

• Legislative ratification of his order to state agencies to hold back four percent of their appropriated funds, which would save $565 million.
• A “sweep” of unspent funds in 37 state trust funds. Trust funds are special-purpose accounts, generally funded from fees and assessments. The sweep is expected to generate $318 million.
• Ratification of the Seminole gaming compact, which, according to the governor’s budget document, would produce $135 million.
• A transfer of $248 million from the state Budget Stabilization Fund, which would leave $424 million in the fund.
• A transfer of $600 million from the Lawton Chiles Endowment, which is funded from proceeds of the tobacco litigation settlement.
• Issuance of $119 million in bonds to support road construction and $300 million in bonds to support prison construction, allowing the cash that had been appropriated to fund these construction products to be used instead to address the deficit.

Some of these concepts are controversial. Mr. Atwater stated on December 18, 2008, that while fee increases might be considered in the special session, the Seminole gaming compact was too complex to be considered during an abbreviated special session. Mr. Sansom has appointed a House committee, the Select Committee on Seminole Indian Compact Review, chaired by Rep. Larry Cretul (R-Ocala) to consider the compact.

The family of the late Governor Lawton Chiles, for whom the Chiles endowment is named, has threatened legal action if the state uses money from the endowment to address the deficit.

Environment: Water District Approves United States Sugar Corporation Land Acquisition With New Conditions
On December 16, 2008, the governing board of the South Florida Water Management District voted to approve the agreement between the district and the United States Sugar Corporation (U.S. Sugar) under which the district would acquire more than 180,000 acres of land from U.S. Sugar for $1.34 billion. The agreement, which was approved by the U.S. Sugar board of directors on December 8, 2008, is contingent on the district’s ability to finance the acquisition. In approving the agreement, the district’s governing board added a requirement that the debt burden not adversely impact the district’s core functions. In a statement, U.S. Sugar described the amendment as a “nonmaterial modification.”

The land acquisition faces other hurdles, including legal action by Florida Crystals Corporation and possible legislative review.

Mr. Crist praised the agreement, calling the land acquisition “the most important, most historic step taken towards true Everglades restoration.”

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