State lawmakers are demanding sweeping changes to the taxpayer-funded programs that Gov. Rick Scott uses to attract jobs to Florida, citing the need for more openness and better accountability.
The changes come in the wake of a Herald/Times investigation into accountability shortcomings within the state’s jobs incentive programs. And the proposed overhaul comes as new leadership takes over Enterprise Florida, the state’s lead economic development entity tasked with assembling incentive packages.
The Legislature’s biggest proposed change would clamp a limit on the total annual amount of state money available to attract companies: a $60 million yearly cap in House legislation and $50 million in the Senate version.
That’s much less than the $85 million Scott has requested from the Legislature for the coming year, and Scott said he sees no reason for an overhaul.
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“What we have been doing has been working,” Scott said in St. Petersburg on Thursday. “I think we need to continue to do it the way we’ve been doing it.”
Insistent on a new approach, lawmakers want a “pay as you go” strategy on incentive deals because they set aside tens of millions more in incentive money than Scott’s administration can spend.
“We’re continuing to add new money for new deals a lot faster than they’re actually being paid out,” said Sen. Jack Latvala, R-Clearwater, chairman of the Senate Appropriations Subcommittee on Transportation, Tourism and Economic Development.
Incentive deals often take more than one year to complete. As a result, the state expends only a fraction of the incentive money available each year. Lawmakers say the rest, about $85 million, sits in escrow, drawing interest at the rate of one-quarter of 1 percent.
Under the proposed bills, unspent money would be invested in an interest-bearing fund at the discretion of Chief Financial Officer Jeff Atwater.
The proposed changes follow a three-part Herald/Times series in 2013 that detailed problems in Scott’s use of state incentive money to lure jobs. But with Scott running for re-election last year, lawmakers did not tinker with a key element of his jobs-first agenda.
The series noted that Scott had pledged $266 million in taxpayer-funded incentives to attract more than 45,000 jobs by the fall of 2013, but the state’s own incentive project data showed that more than 95 percent of those jobs had not yet materialized. The series noted that $45 million in incentive money sat unspent, a figure that has since grown to $85 million.
The state spent money for projects that fizzled, such as $250,000 to upgrade a Kissimmee warehouse for Colt’s Manufacturing, a firearms manufacturer that did not create the 63 high-paying jobs it promised.
At a groundbreaking ceremony in 2011, Scott said, “It will be great when you see it.”
Latvala said state law will be changed to prevent that from happening again. “There’s no up-front money,” Latvala said.
Florida has seven incentive programs to help existing companies expand or lure new companies to the state.
They include tax refunds, performance-based cash awards and money to train workers, and targeted refunds to companies that create high-wage, high-demand jobs in space, defense and other specific sectors of the economy or redevelop polluted areas known as brownfields.
Scott, accompanied by economic development aides, traveled to Philadelphia last month, seeking to poach jobs there, and he plans a similar trip to California in May.
Latvala said his bill (SB 1214) also would give more flexibility to Enterprise Florida, the state’s public-private job-creation arm, to make deals with companies. In January, Enteprise Florida’s board approved naming former PortMiami director Bill Johnson as their new CEO, replacing Gray Swoope, who acted as the governor’s chief jobs creator for four years.
One proposed legislative change would require the next president of EFI to be confirmed by the Senate, the same as for heads of state agencies. That’s often a perfunctory step, but it would give senators more oversight over EFI, and lawmakers say Scott has voiced reservations about that provision.
The Senate bill also would give Scott the authority to approve deals involving up to $2 million in incentive money without legislative oversight, but any amendments to projects must be reported to the Legislature at least three days in advance.
In the House, a 148-page incentive reform bill (HB 5401) is sponsored by Rep. Clay Ingram, R-Pensacola, who also cited the need for increased transparency.
“The intention is for the Legislature to maintain its authority to appropriate funds and to make it as transparent and accountable as possible,” said Ingram, who chairs a House economic development budget subcommittee.
A statewide business group that supports Scott’s job creation efforts, the Florida Chamber of Commerce, opposes a cap on incentive money.
“We’re a little concerned about what message that might send to businesses that are considering relocating to the state and that money might not be available for them,” chamber lobbyist Carolyn Johnson said in Senate testimony.
Both bills have won unanimous bipartisan votes in legislative committees, but both are likely to undergo more changes.
The senior Democrat on the House panel, Rep. Hazelle Rogers, D-Lauderdale Lakes, said lawmakers should steer some incentive money to areas with double-digit rates of poverty and unemployment.
“We’re not providing incentives specific to those communities,” Rogers said.
Latvala is the most likely lawmaker to resolve differences with Scott in the closing days of the session.
The Clearwater Republican said he would remind Scott that he must accept parts of a bill he doesn’t like to get what he does want, such as more flexibility to cut incentive deals with employers.
“It’s a give-and-take process,” Latvala said.
Tampa Bay Times staff writer Ivan Penn contributed to this report.
Contact Steve Bousquet at firstname.lastname@example.org. Follow @stevebousquet
Overhauling tax incentives
Highlights of legislative proposals to change Florida’s taxpayer-funded jobs incentive programs:
▪ Limits total annual incentive project payments ($50 million in Senate, $60 million in House)
▪ Allows governor to approve deals granting incentives of up to $2 million
▪ Prohibits incentive payments unless project meets performance goals
▪ Limits incentive deals to 10 years unless deals are greater than $20 million
▪ Requires Senate confirmation of next president of Enterprise Florida
▪ Requires Enterprise Florida to transfer unspent incentive cash to a new state account
▪ Requires advance notice to Legislature of all project changes at least three days in advance
Sources: Florida Senate Bill 1214, Florida House Bill 5401