Florida legislators say ‘no’ to ‘corporate welfare’

Florida legislators say ‘no’ to corporate welfare|

Enterprise Florida Inc. (EFI) was recently forced to downsize, dramatically, after the Legislature rejected its bid for $250 million to attract companies to Florida, which some deemed “corporate welfare.”  Governor Rick Scott blamed the Legislature for EFI’s demise and ordered its board of directors to make $6 million in cuts to its staff and office space. The agency has 90 employees and a payroll of $9 million. EFI will begin restructuring, including converting it to a private entity, with no public money. Most of Enterprise Florida’s operating budget is paid by taxpayers. Facing the drastic downsizing and restructuring, President and CEO of Enterprise Florida, Bill Johnson, recently resigned. Johnson had a two-year contract for a $265,000 a year salary and held a second title as Florida’s commerce secretary. You can read the text of Johnson’s resignation letter here.

HB 1325 and SB 1646 were so-called “economic development packages” sponsored by Representative Jim Boyd and Senator Jack Latvala, respectively. Governor Scott recently appointed Rep. Jim Boyd to the Board of Directors of Enterprise Florida. In fact, each member of the Florida Cabinet holds a position on the board and Florida Governor Rick Scott serves as the Chairman of EFI’s Board of Directors. These so-called “economic development packages” created a new incentive program, the Florida Enterprise Fund, which was requested by the Governor. The program came with a price tag of $250 millionHB 1325 also allowed the Governor to approve grants to businesses of up to $2 million without consulting the legislature. According to Americans for Prosperity (AFP), the Senate version included a renewal of Florida’s film incentive program, which for the past five years, has given the taxpayer a return of only 43 cents for every dollar spent. AFP claims the senate version also removed legislative oversight for the disbursement of millions of taxpayer dollars to professional sports franchises, which already get millions of tax dollarsHB 1325 passed in the House and SB 1646 passed two of its three committees in the Senate. However, the bills died when budget negotiations revealed that there would be no funding for such programs included in the fiscal year 2016/2017 budget.

Representatives Matt Gaetz and Doug Broxson voted for HB 1325, whereas Rep. Mike Hill opposed it. You can view the House votes here. Broxson and Hill are currently competing to fill the Florida Senate seat recently held by Sen. Greg Evers, who is also competing against Matt Gaetz for a U.S. Congressional seat for District 1, formerly held by Rep. Jeff Miller. You can see the Florida Senate committee votes for SB 1646 by clicking here.

The Miami Herald notes: “Scott had insisted on $1 billion in tax relief, but legislative leaders settled on $400 million, half of which is for one year. Scott wanted $250 million over three years for a new enterprise fund to lure jobs to the state, but lawmakers flatly rejected the idea. ‘The enterprise fund is at zero,’ Rep. Richard Corcoran, R-Land O’Lakes, chairman of the House-Senate budget conference committee, told reporters after a brief organizational meeting Friday. Corcoran, the incoming House speaker, and many other House conservatives view public subsidies to private companies in return for jobs as a form of ‘corporate welfare.’ Corcoran considers himself an ally of Scott’s, but he does not believe that giving cash or tax breaks to businesses creates jobs, and he rejects the argument that Florida should do it to remain competitive with other states. ‘It is government engineering the marketplace,’ Corcoran said in a Herald/Times interview. ‘It absolutely is a distortion of free markets.’”

Americans for Prosperity-Florida (AFP-FL) fiercely opposed funding Enterprise Florida, calling it “corporate welfare.” After EFI President and CEO Bill Johnson criticized AFP-FL for opposing Enterprise Florida, AFP-FL State director, Chris Hudson said, “AFP has a long and consistent history of opposing all forms of corporate welfare, no matter what companies or industries benefit.” Hudson continued, “Executives at Enterprise Florida, Inc., and the state employees who pushed out this erroneous attack on a private company [AFP], could better spend their time doing the job that taxpayers are paying for them to attempt to accomplish, at a rate of nearly 90-10 from taxpayer contributions in their supposed public private partnership. EFI, who has come under serious internal scrutiny of late, claims that they are trying to help small businesses create jobs, but the reality, is 85% of Florida businesses have less than 10 employees and don’t qualify for the lavish handouts Bill Johnson and company want to dish out. EFI says they want to diversify the economy, but the reality is that almost half of all incentive projects from 2000 to 2010 were for the manufacturing industry. Despite that generous support from taxpayers, the percentage of our GDP from manufacturing has actually declined.”

According to EFI, “Enterprise Florida, Inc. (EFI) is a public-private partnership between Florida’s business and government leaders and is the principal economic development organization for Florida…and is funded both by the State of Florida and by private-sector businesses…each member of the Florida Cabinet holds a position on the board. Florida Governor Rick Scott serves as the Chairman of EFI’s Board of Directors. Florida’s Secretary of Commerce, Bill Johnson serves as President and CEO of Enterprise Florida.” As a public-private partnership, Enterprise Florida is expected to obtain private sector support to help pay for its costs of operation. The Florida Legislature required the corporation to obtain 50% private sector contributions by Fiscal Year 2000-01. However, as of Fiscal Year 2010-11, according to the 2011 IRS 990 Form (www.Guidestar.org) , more than 85% of Enterprise Florida’s funding comes from government (tax payers) and less than 15% comes from the private sector.

The Florida Development Finance Corporation (FDFC) is a “conduit issuer” providing qualifying projects with access to capital. Governor Rick Scott recently appointed Frank White to serve as the Chairman of FDFC. According to this EFI fact sheet, FDFC is not a division of Enterprise Florida, though FDFC is solely administratively housed at Enterprise Florida. Enterprise Florida “provides administrative services on behalf of the FDFC Board for the day-to-day operations of the corporation.” According to EFI, “Florida Development Finance Corporation (“FDFC”) is a state authorized issuer of industrial revenue bonds.” Industrial Revenue Bonds are issued by a government entity to assist a private company for its venture. FDFC offers “tax-exempt, low interest bond financing” to qualified manufacturing and 501(c)(3) non-profit organizations. “FDFC will conduct all public hearings in the appropriate jurisdictions and work with all parties involved; bank, borrower and legal counsel to ensure the project meets the criteria and that all paperwork is completed correctly and in an orderly fashion.”