A clash intensified Monday between Gov. Rick Scott and his fellow Republicans who control the Florida Senate over hundreds of millions of tax dollars used as bait to attract jobs from out of state.
Senate President Andy Gardiner, R-Orlando, questioned for the first time whether Enterprise Florida has the legal right to keep hundreds of millions in job incentive money in escrow bank accounts where it draws virtually no interest.
In a memo to senators, Gardiner cited problems with one incentive program in particular, the Quick Action Closing Fund, in which Enterprise Florida puts money in escrow. The money is paid to employers over a period of up to 12 years as they create promised jobs.
“The current practice of escrowing funds is not specifically authorized by the Legislature in law and has complicated the appropriations process,” Gardiner told senators.
Scott, who has made job creation his top priority, is board chairman of Enterprise Florida, a public-private hybrid that relies on taxpayer support for a half-dozen programs that use cash incentives and tax refunds to lure jobs.
“Let’s deal with the facts. If we recruit a company to come to our state, you have to allocate the dollars. Those dollars are absolutely committed to those companies,” Scott told reporters in Tallahassee Monday.
Scott spoke before he had seen Gardiner’s memo, and his office later emphasized that Florida needs to have as much money as competing states such as Texas or Connecticut, where General Electric is considering leaving.
Scott and Enterprise Florida’s top executive, former Port Miami director Bill Johnson, have criticized the Legislature for giving Enterprise Florida about half of the $85 million it requested this year. They say it will soon run out of money to offer incentives to companies.
Johnson has been asked to testify about the incentive programs Wednesday before the Senate Commerce and Tourism Committee.
Gardiner said the Senate’s position is that Enterprise Florida isn’t spending all the money it gets from the Legislature, yet keeps demanding more.
Since Scott took office in 2011, Gardiner said, nearly all of the $264 million approved for the quick action fund is either in escrow or was returned to the state treasury, unspent.
Senators were shocked to discover that Enterprise Florida’s escrowed money draws interest at the rate of one-quarter of 1 percent.
A bill to improve the interest rate, sponsored by Sen. Jack Latvala, R-Clearwater, failed in the regular session. “Shouldn’t we be leveraging our money like businesses do?” asked Latvala, who chairs a budget committee overseeing all job incentive programs.
Latvala said he was skeptical of Enterprise Florida’s “doomsday, sky-is-falling scenario.” He said neither Scott nor Johnson has called him to express their concerns.
“It’s a question of judgment and stewardship of taxpayer dollars,” Latvala said.
Over the past four years, the Senate president’s memo said, Enterprise Florida did not spend a total of $220 million set aside for all job incentive programs. Gardiner said that’s enough money to pay for at least four 10-day back-to-school sales tax holidays.
“Continuing to use this approach is clearly far from the highest and best use of limited taxpayer resources,” Gardiner wrote.
A Herald/Times series in 2013 found that more than 90 percent of the new jobs Scott had announced had not yet materialized. Incentive payments are not made until the jobs are documented.
Enterprise Florida did not respond to requests for comment Monday.
In another troubling sign for the governor, the Senate wants to switch from escrowed money to a “cash flow” system in which the Legislature would fund existing job deals on a year-to-year basis. Scott is opposed to making multi-year incentive payments to firms dependent on yearly spending decisions by the Legislature.
Gardiner said a pay-as-you-go system works well in other programs, most notably the Department of Transportation’s five-year work plan.
“We need to change how we fund economic development,” Gardiner’s memo said. “A business would not set aside the total funds needed for a long-term investment years before the first payment is needed.”