Florida lawmakers generous to a fault
Millions in state tax dollars given away, spent unchecked
12/09/1990 3:02 PM
09/08/2014 5:33 PM
The Florida Legislature gave away more than $100 million this past year -- public giveaways with little oversight and virtually no accountability for how the money was spent.
Swayed by politics and top-dollar lobbyists, the Legislature doled out millions to groups that have wasted state money, spent it illegally or channeled it to political cronies. In some instances, a Miami Herald investigation of state records over the past five years showed, the giveaways indirectly benefited individual legislators.
The money was appropriated through direct grants to nonprofit groups and to local governments, even though the state agencies nominally in charge of the money rarely sought the funding.
Many grants came with no strings attached. As a result, usually rigid state rules for spending money -- even lottery dollars -- didn't come into play.
Says Assistant Comptroller Ash Williams, "It's no accident. The reason these are done by direct legislation is to avoid accountability."
Contracts are not put out to bid. Salaries are not regulated. State policy is not followed.
Peter Dunbar, the governor's general counsel, is equally blunt. "Nobody meant for the system to become corrupted, but it has."
There is no system to weed out bad projects or recognize good ones, which makes it impossible to determine how much of the approximately $100 million appropriated in direct grants each year is well spent.
The records show:
* The Florida Lottery, which is earmarked for education, paid for then-Senate Appropriations Committee Chairman Gwen Margolis of North Miami, Sen. John Grant of Tampa, Rep. Bo Johnson of Milton, Rep. Jack Tobin of Margate and Patti Woodworth, the governor's budget director, to fly to Israel as part of an agricultural research project in March.
Lottery money also paid for Reps. Art Simon of Kendall, Jeff Huenink of Clearwater and Ron Saunders of Key West to fly to Brazil last November. Most of the legislators who went on the trips say they did not know lottery money financed them. It was all part of the $500,000 appropriated in 1989 for "international education linkages."
* The Legislature granted $400,000 to the American International Exhibition for Travel, a Miami Beach for-profit company that vowed to promote tourism in 1987. The firm paid a Tallahassee lobbyist $52,000. Four months after getting the state check, the company owner disappeared. His firm owed $1 million, including back taxes, to the state of Florida.
* The Legislature appropriated $1 million in 1989 to fund amateur athletic facilities. The money actually went to the Ladies Professional Golf Association. In 1990, the Legislature appropriated $2 million for "the 11th Street Access Exchange Road." The street will lead into the LPGA's new headquarters in Daytona Beach, home of House Speaker T.K. Wetherell, who was then appropriations chairman.
* Then-House Speaker Tom Gustafson, D-Fort Lauderdale, sponsored a $300,000 appropriation in 1989 for the American Horticultural Marketing Council. His father-in-law, Jerry Soowal, owns a Broward nursery and is a marketing council director. As part of the state grant, Soowal flew to Poland to attend a conference. Gustafson said the group had gotten state funding years before he met his wife. He said all he did was make sure the funding continued.
* Rep. Alberto Gutman, R-Miami, helped the Adults Mankind Organization, a group that was supposed to help Nicaraguans get jobs, obtain a $100,000 grant in 1989. The executive director is a felon convicted of embezzlement. The president's husband is Gutman's friend. Gutman did not return phone calls seeking comment.
* In May, the National Association for Crime Prevention, a group that obtained $160,000 in state money through Gutman, and the Adults Mankind Organization offered to provide tenant services at a building Gutman owned in Miami Beach. The services helped Gutman campaign aide Henry Berger, who had an option to buy the building, to petition for $51,600 in housing tax credits.
* Rep. Luis Rojas, R-Hialeah, engineered a $100,000 grant to the Hialeah Latin Chamber of Commerce in 1989 for a "productivity improvement center." The chamber then hired Rojas' former legislative aide, Carlos Manrique, who went into business with a company owner he met through the grant. Rojas said the grant brought new business to Hialeah. Manrique said he had the qualifications to do the job.
* In a sampling of Dade County nonprofit groups funded by the state in 1989, about a third of them used tax money to pay lobbyists who helped them obtain the money, even though the state prohibits doing so. The Herald's sampling found $100,000 in tax money spent on lobbyists, but the dollar total could be much higher.
These are not isolated examples.
Rep. Fred Lippman, D-Hollywood, helped the Southeastern College of Osteopathic Medicine, where he is a vice president, get funding for a $105,000 program to train interns in rural areas. He said he first helped the college get the grant before he worked there.
Rep. Sam Mitchell, D-Vernon, sponsored a $200,000 appropriation in 1987 for a project to encourage farmers to raise catfish. He ended up with a contract to clean and sell the fish. "They begged me to do it, " Mitchell said. "I don't see any conflict at all in this."
Former Sen. John Vogt of Cocoa Beach voted in 1985 for an experimental cleanup of Lake Apopka using water hyacinths. Amasek, his engineering firm, later got more than $2 million in state contracts as part of the cleanup. Vogt filed a disclosure that noted his firm was one of the few in the state able to do the work. It was the only company that later bid.
Political connections and lobbyists are key factors in determining who gets state money. The grants are administered through various state agencies, which often did not request them. A project's worth matters little. An agency's priorities matter even less.
Former state Secretary of Commerce Jeb Bush said the Legislature "held hostage" his budget without ever giving it a full hearing. "There was no thoughtful discussion of the effectiveness of programs. There was a tremendous amount of lobbying for these legislative initiatives."
Legislators allocated $415,000 to one Miami project -- a building for Cuban Municipal Officials in Exile -- through grants to Community Affairs, Commerce and Health and Rehabilitative Services. None of the agencies requested the money.
"A lot of these are outright gifts, " said Dunbar, who was a state legislator for 10 years before becoming the governor's legal adviser. "We need an oversight system that doesn't exist at the moment."
Most agencies refer to the grants as "pass-throughs."
"The whole process is absurd, " said Woodworth, the budget director under Gov. Bob Martinez. "It's whatever you get in. Everything becomes a state need."
The special projects are inserted into the budget by legislators, usually by members of the House and Senate committees on appropriations. There is no written record kept of who sponsored what. Often, a member asks someone else to get a project into the budget as a favor.
"Unfortunately, it's done without full discussion at public hearings, " said John Andrew Smith, staff director of the Senate Committee on Appropriations.
Last year, Wetherell created a fictitious $1.1 million line item in the budget -- for the restoration of Silver Beach, even though there is no such place -- so he could have a fund from which to dole out money to legislators for special projects.
Wetherell said money has been put aside every year. He just did "the stupid thing" in giving it a phony name.
"The process itself may not be so bad. The way it's been used may be inappropriate and harmful to the state, " said Dade delegation chairman Rep. Elaine Bloom, D-Miami Beach. "My response is to give the auditor general the responsibility to go in and check on what's been done with the money."
Part of the problem is that few people in state government -- including legislators -- understand the appropriations process. Another problem is the speed with which bills are approved during the 60-day legislative session.
The process is so confusing that last year, Sen. Carrie Meek, D-Miami, thought she had been successful in getting a $200,000 appropriation for Youth Crime Watch of Dade County, the group that works with the Dade County School Board.
But the money went to Youth Crime Watch of America, a different group that trains students throughout the state.
Often legislators rely on lobbyists to help them find sources of money and convince the appropriation staffs that a project should be funded.
Rep. Rojas said a lobbyist told him where to find $400,000 for a road project in Hialeah.
Rojas offered a frank account of how he and other members of the Dade Cuban-American Caucus sat around one day in 1989 deciding how to get their pet projects funded.
The group had made a deal with Gustafson not to support his Democratic opponent for the House speaker's job. Gustafson told them they could "trust him" to look out for their needs -- and would give them key slots on the appropriations committee.
"I said the Hialeah chamber got $25,000. Let's ask for 100, " Rojas recalled.
Martinez kept most of the caucus' projects in the budget. But he did veto one $25,000 grant. Sponsored by former Rep. Nilo Juri, the money was for a nonprofit Hialeah group -- but Martinez's staff discovered that the group's phone number was actually a phone booth.
"People had a wish list, " Rojas said. "We were like kids with candy."
The candy belonged to Florida's taxpayers. It is impossible to come up with an exact total of how much of the state's $27 billion budget is involved. The Herald found more than $135 million in special projects in the 1989 budget -- about $22 for every household in Florida. The governor's budget experts say the amount is even higher -- around $200 million a year.
How many of those projects are a poor use of taxpayers dollars is hard to gauge. Sen. Jack Gordon, D-Miami Beach, estimated that 10 percent of the grants were "phonies" and another 30 percent were probably questionable.
"The fact of the matter is there are legitimate one-time projects that add to our quality of life, " said Rep. Mike Abrams, D-North Miami Beach. "When there are abuses, it tends to cloud the good public policy decisions we make. We need to eliminate them."
Faced with impending budget cuts and layoffs, state bureaucrats say there is enough money spent on public giveaways each year to ease the current financial crisis. In the Commerce Department, for example, none of the agency's $8 million in direct grants were cut when it was forced to reduce its budget by nearly 5 percent earlier this year.
"This is a continuing frustration to us, " said Williams of the comptroller's office. "We see every day legitimate government needs that are going unmet because of a tight budget process."
The new House appropriations chairman, Key West Democrat Saunders, said he will seek hearings next session for all projects not requested by an agency.
"In the past, we've put things in the budget that I think we would have a hard time defending, " Saunders said. "The bad news is we're in a budget crunch. The good news is people are going to be willing to look at different ways of doing things."
Rojas agreed. He said the proper way to get a project funded would be to go to the agency, suggest a program, have the agency determine if it is needed and then submit it to a legislative committee for analysis.
"That's the way it should be done, " he said.
It isn't done that way now.
Sometimes, grants are inserted into the budget by legislators as amendments on the floor. That's the smart way, Rojas said, because "everyone's tired, and no one's looking."
In 1989, most special projects for the first time were listed in the budget as individual line items.
But delineating the items didn't do much to explain how the money was supposed to be spent.
Take the case of the money that went to the Ladies Professional Golf Association. The money was appropriated in the Commerce Department's budget. Here's how the line item read:
"Funds in Specific Appropriation 2152A are included for economic development projects in the amounts indicated. These funds may be advanced in part or in total.
" . . . Amateur Athletic Facilities . . . $1,000,000."
Secretary of Commerce Bobby Brantley, also the lieutenant governor, wrote the governor's office for clarification on that and nine other items: "The 1989-90 General Appropriations Act placed several items in the Department's budget without specifying to whom the funds are to be paid or the exact public purpose of the funds. We are receiving requests for these funds and are unable to determine the appropriate recipients."
By law, the department could look to the work papers for guidance, seek clarification from the chairmen of the appropriations committees or put the project out to bid.
Wetherell dashed off a letter to the Commerce Department, explaining who the intended recipient of the money was: the city of Daytona Beach. Several weeks later, Wetherell and Margolis wrote the Comptroller's Office to clarify the item further.
The legislative intent, they said, was to give the money to Daytona Beach so the city could help the LPGA move its headquarters there. The item was originally titled "athletic facilities, " they wrote. "The description of "amateur" athletic facilities was inadvertently added during the Appropriation Conference Committee and should not be considered a restriction."
Said Wetherell: "They screwed up the title."
The Commerce Department gave Daytona Beach the $1 million.
The LPGA got $200,000 for relocation expenses from Texas and $800,000 to buy a 40 percent interest in an office building and surrounding grounds. The state kept no rights to the building.
In another instance, the Auditor General's Office in 1988 criticized the Department of Agriculture when it gave a grant to a county farmer's market. The group receiving the money used it to buy three acres of land without following the state's land- buying policies.
Agriculture Commissioner Doyle Conner responded, saying the Legislature was to blame. "Each year during the legislative appropriation process it is made quite clear that these are 'local projects' for which the Department acts as a conduit for the funds to be passed through to various government entities."
Often, the "pass-through" means the grant is paid up front in one big check.
"If you're one of these nonprofit organizations, you get a check, put it in your own private bank account and start spending, " said Smith, of the Senate appropriations staff. "One of the things I've been concerned about is the lack of accountability."
Most state agencies say they don't have the staff to monitor or audit the grants. Although state law requires every agency to have an internal auditor, the state has not backed up the auditors with staff.
"We don't apply the same amount of oversight as a regular department program, " said Jack Walsh, Agriculture's bureau chief for budget and accounting. "We just don't have the staff to go around the state doing that."
The Commerce Department has requested money for auditors, but they haven't been funded.
"Traditionally, the agencies up here have known these were political appropriations, " said Rob Lankford, the department's director of administration. "We simply executed contracts and said, 'Here's your money.' "
Two years ago, the Commerce Department started requiring groups that got state grants to submit a written project description and budget before getting the money. HRS, Education and Community Affairs also do this.
They also require the groups to hire an independent auditor and submit the results to the state. But if a grant is appropriated to a city, which passes it on to another group, only the city files the audit.
"Chances are an audit report is not going to address a dime of that money, " Lankford said.
He also said his agency cannot lawfully question the public value of expenditures. "You can say they're throwing money away, but you can't say it's not for a public purpose, " Lankford said.
Even some of the groups getting state money want to see the system changed.
"We have to make government accountable. These are very scant resources we go after, " said Charlotte Gallogly, executive vice president of the World Trade Center, whose affiliated group, the World Trade Institute of the Americas, received $150,000 in a two-year grant.
Gallogly said she would have welcomed a monthly monitoring of the institute's international business training program -- so state officials would have known the money was well spent.
"If you don't monitor, things get exacerbated, " she said. "I think the least they ought to ask for is monthly reports."
The comptroller's office is charged with preauditing state expenditures to make sure the money is used lawfully.
When the money is paid in a lump-sum advance, and the Legislature gives few -- if any -- instructions on how the money should be spent, the comptroller's hands are usually tied.
"When that money is out the door, we don't have any control on it, " Deputy Comptroller Thomas Clemons said.
Last year, for the first time, the House Appropriations Committee required hearings for all new special projects.
"What we tried to do was put a process in place where there was oversight in the front end, " Wetherell said. "What we need to follow up with is an oversight on the back end."
The Herald obtained tapes of the subcommittee meetings. The hearings were not scheduled in advance; legislators or lobbyists made brief presentations when they had time.
Rep. Ron Silver, D-North Miami Beach, for example, pleaded the case for the Motorcycle Grand Prix of Miami. It needed state money, Silver said, to defray the cost of police security.
The race received $125,000.
But the House voted the item out of the budget and allotted the money instead to child care. It was put back in the conference committee -- the panel that hashes out differences between the House and Senate versions of the budget -- and ultimately funded.
The money, however, didn't go for police security. Instead, the city of Miami told Commerce the race would use it to pay for insurance, tents, toilets and installation of bleachers and fences.
The proviso that the money go toward police was not included in the budget.
Legislators put no restrictions on the money for the race nor 20 other economic development projects in the 1990 budget.
Nor did they put restrictions on a $250,000 grant to the International Motor Sports Association in 1989. IMSA wrote to Commerce that it would use some of the money to study and find a site for a racing Hall of Fame in Tampa.
None of the money was spent on the hall of fame. Instead, the association spent it on moving expenses, computers, furniture and a $10,000 catered party.
"It was an open-house type of thing. A lot of people were invited. A lot of people came, " said IMSA comptroller Wayne Coffield.
"It wasn't a lot of money compared to the other things we have around here." HOW IT WORKS
Once the Legislature decides to fund an item, it can be hidden in the budget as part of a larger item but earmarked in the "work papers, " thousands of pages that specify how the Legislature wants the money to be spent.
Approved only by the chairmen of the appropriations committees, the work papers are never voted on by the entire Legislature. Most members don't ever get a chance to review them.
The governor has the right to veto line items in the budget. But items tucked in the work papers are veto-proof.
In 1988, Gov. Martinez vetoed items in the work papers anyway. Legislators sued. The Supreme Court rejected his vetoes, and also ruled that the working papers were not a binding, legal document.
The ruling prompted Martinez to urge agencies not to follow the Legislature's guide. For instance, last year he asked Education Chancellor Charles Reed not to implement a $325,757 appropriation in the work papers that would have created a job for retiring Sen. Curtis Peterson, D-Lakeland.
The Legislature had placed the project within a larger item, which made it impossible for Martinez to veto without also vetoing the entire salary fund for the state university system.
"I hope you will agree with me that this program sets a poor example and its implementation is not based upon sound reasoning for the expenditure of these public funds, " Martinez wrote to Reed. Reed ultimately followed Martinez's recommendation.
Even though the work papers are legally just a guide for agencies, House Speaker T.K. Wetherell said he doubted that many agencies would ignore the Legislature's intent since it also approves their budgets.
"I just think we have to be more diligent about what is in the work papers, " said Rep. Elaine Bloom, Dade delegation chairwoman.
-- LISA GETTER
Join the Discussion
Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.