State Budget: Details of House and Senate Budget Plans Emerge
In the third week of the 60-day legislative session, the Florida House and Senate moved closer to finalizing their respective proposals for the $67-billion 2010 – 2011 budget. Appropriations committees met throughout the week to get their proposals in a position to be considered by the top budget-writing committees, the Full Appropriations Council in the House and the Ways and Means Committee in the Senate.
The two chambers have different approaches to dealing with the $3-billion budget shortfall.
The House plan will include a three percent overall reduction in state employees’ salaries and benefits, which would save approximately $80 million. The proposal would not, however, require state employees to pay any additional costs for health insurance. The plan also proposes education funding cuts, including a $30-per-pupil cut in public school funding and reductions in funding for higher education. The House also would use affordable housing and transportation trust fund money to cover some of the budget gap.
The Senate is expected to make cuts to Medicaid by shifting approximately 250,000 recipients into HMOs, which would save $28.6 million in 2010 – 2011 and up to $100 million a year in subsequent years. The Senate also is considering eliminating the Healthy Families program, cutting reimbursement to health care providers, and eliminating state funding for public libraries.
The Senate proposal would include a $151-per-pupil increase in public school funding, but that increase would depend on county school boards’ approval of a 0.25 mill increase in local property taxes. The Senate would increase funding for the Bright Futures scholarship program, but would phase in an increase in program eligibility standards.
One of the more controversial budget issues concerns the use of a potential $1 billion of additional federal Medicaid funding. Sen. Durrell Peaden (R-Crestview), who chairs his chamber’s Health and Human Services Appropriations Committee, has asked that any additional federal money be used to offset health funding cuts. However, Senate President Jeff Atwater (R-North Palm Beach) has said that the federal money could support tax and fee cuts, including a cut in the corporate income tax rate, a rollback of some of the fee increases enacted by the 2009 Legislature, and restoration of a back-to-school sales tax holiday.
Utility Regulation: House Committee Proposes Dramatic Restructuring of the Florida Public Service Commission
Both the House and Senate have now responded to the Florida Public Service Commission (PSC) ethical issues that arose in late 2009. On the second day of the legislative session, the Senate adopted SB 1034, which would impose strict ethical standards on members and staff of the PSC. Two weeks later, on March 17, 2010, the House Energy and Utilities Committee adopted a proposed committee bill, PCB EUP 10-04, that not only addresses standards of conduct, but also restructures the regulatory agency.
Currently, the PSC is both a policy-making body and an adjudicator of conflicts. Under the House plan, the bulk of the PSC staff would be shifted to a new Office of Regulatory Staff under the legislative branch, and the role of the PSC commissioners would be limited to their quasi-judicial function. The plan is patterned on a plan adopted by South Carolina in 2004.
The proposal also would lengthen the terms of commissioners, require their appointments to be confirmed by both houses of the Legislature, include a narrower limit on ex parte communications than the restrictions in the Senate bill, and ban former commissioners from lobbying during the first two years after leaving the PSC, as distinguished from the Senate bill’s four-year ban.
Governmental Reorganization: Legislative Committees Consider Proposals to Break Up the Department of Management Services and Reorganize the Department of Health
On March 17, 2010, the Senate Governmental Oversight and Accountability Committee approved a bill, CS/SB 1238 by Sen. Jeremy Ring (D-Margate), that would dissolve the Department of Management Services and distribute its functions among several existing agencies. Under the proposal, which the committee passed on a 5-3 vote:
- A new Department of Personnel Management would have responsibility for human resources, employee insurance benefits, and retirement benefits. The new department also would be the administrative home of several independent agencies, including the Division of Administrative Hearings and the Agency for Workforce Innovation.
- State purchasing, fleet management, federal surplus property, and private prison monitoring would be transferred to the Department of Financials Services.
- The Department of Environmental Protection would take over state facilities management and building construction.
- Other functions would move to the Executive Office of the Governor, the Department of Law Enforcement, and the Agency for Enterprise Information Technology.
According to Sen. Ring, the proposal has the support of Senate leadership. House Speaker Larry Cretul (R-Ocala) has indicated that the plan has yet to gain traction in the House.
Under a proposal to be considered by the House Health Care Regulation Committee on March 22, 2010, the Department of Health (DOH) would be scaled back. A proposed committee bill, PCB HCR 10-03, would replace the agency’s current 13 broadly defined purposes with seven more specific responsibilities. The department would have until December 1, 2010, to provide the Legislature with a proposed organizational plan that streamlines the DOH organizational structure in line with the redefined responsibilities. The bill would also require legislative approval before the department could initiate new federally funded programs.
A key Senator, Health and Human Services Appropriations Chair Durrell Peaden, was dismissive of the proposal, saying that it was a waste of time at this point in the session and would not create any efficiencies.
Property Insurance: House Panel Passes Scaled-Back Deregulation Bill
On March 17, 2010, the House Insurance, Business, and Financial Affairs Committee passed CS/HB 447, a scaled-back rate regulation bill that increases insurers’ flexibility in ratemaking without providing full rate deregulation. At the urging of the bill’s sponsor, Rep. William Proctor (R-St. Augustine), the committee adopted amendments that cap an insurer’s ability to raise rates without regulatory approval and incorporate provisions from other property insurance proposals.
The 2009 Legislature passed a rate deregulation bill, but Gov. Charlie Crist vetoed that bill. The original version of the 2010 bill was similar in many respects to the vetoed 2009 bill.
As amended, the House bill provides limited authority for a residential property insurer to raise rates without regulatory approval, but the increase is capped at a statewide average five-percent increase in the first year, 10 percent in the second year, and 15 percent in subsequent years. The bill also was amended to address several other property insurance issues, including Citizens Property Insurance Corp. assessments, hurricane-loss mitigation discounts, replacement cost coverage, and sinkhole claims.
Public Policy 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 |
Jonathan P. Kilman |
Marnie George of The George Group assists Foley on a variety of government and public policy matters as a consultant.