2016 Session - Week 3

February 8-12, 2016

House and Senate Pass Their Budgets, Conference Negotiations to Follow

The House and Senate both passed their versions of the next state budget this week.  The House spending plan totals $79.98 billion.  This is $1.58 billion more than current spending and $730 million more than the Governor recommended.  The Senate budget totals $80.97 billion, $1 billion more than the House.  

After the two chambers’ leaders agree on dollar allocations for the various parts of the budget, conference committee meetings will begin to negotiate the differences. 

The House also passed its “$1 billion” tax cut package, which contains Florida TaxWatch recommended provisions including making the sales tax exemption for manufacturing machinery and equipment permanent, reducing the business rent tax and increasing the research and development tax credit.

This week also saw several bills relating to Florida TaxWatch research priorities pass committees, including, pension reform, encouraging pre-arrest diversion programs and other Smart Justice measures, expanding registered nurse and physician assistant scope of practice, promoting telehealth, improving the state’s behavioral health system and several government efficiency bills.  Florida TaxWatch appeared before several committees this week, presenting our research on some of these issues. 

Taxes

House Tax Cut Package – This week, the full House approved HB 7099 -- the House proposal to reduce taxes by “$1 billion.”   It is a wide-ranging proposal that includes almost 40—mostly small--provisions.  The House reaches its $1 billion total by adding the annualized recurring (permanent) cuts and the non-recurring (one-time) cuts – some of which do not take effect until FY 2017-18.  However, the total value of the cuts in the upcoming budget year is $352.1million and will rise to $571.0 million in FY 2017-18 (including both state and local revenue).  The value of the tax cuts would peak at $630.7 million in FY 2018-19 and then fall to $461.1 the following year.  

Florida TaxWatch commends the House for including three provisions recommended by Florida TaxWatch:

Sales Tax Exemption for Manufacturing Machinery and Equipment – The bill will make the exemption--set to expire April 30, 2017--permanent, saving taxpayers $73.1 million annually. 

Business Rent Tax (BRT) – The bill would reduce the sales tax rate imposed on the rental of commercial property from six percent to five percent.  The tax will drop to 4 percent for one calendar year beginning January 1, 2018, then return to 5 percent.  The 1 percent reduction would save businesses $298.5 million annually.  

Research & Development Tax Credit – Businesses can receive an income tax credit of 10 percent of the increased R&D expenditures in Florida.  The House proposal would increase the cap from $9 million to $18 million for calendar year 2017.

For more information on all the provisions in the House Tax Cut Package see this Florida TaxWatch analysis.  

 

In addition, the Legislature continued to move other tax bills through the process including three Senate bills that contain provisions that are in the House tax package. 

Aviation Fuel Tax – SB 844 provides that beginning July 1, 2019, a tax credit given to certain airlines for increasing their Florida workforce would be repealed and the fuel tax rate would be reduced from 6.9 cents per gallon to 4.27 cents per gallon.  The combination of the changes is expected to be revenue neutral.  Only four airline currently qualify for the tax credit and it is felt by the bill’s supporters that the credit is no longer needed. This would be a tax increase for those airlines currently receiving the tax credit, but a tax cut for all other airlines.  SB 844 passed the Finance & Tax Committee this week.  There was sentiment that the rate needs to come down further because other states levy lower (or no) tax on aviation fuel and that Florida is losing revenue because airline refuel in other state.  The House tax package (HB 7099) also includes these provisions.

Corporate Income Tax Piggyback – The Legislature annually passed a bill that conforms the state CIT code to federal tax changes.  This year the feds passed increased expensing and depreciation deductions, as they have often in recent years.  The Legislature has routinely allowed taxpayers to take the federal deductions but makes them add-back the deductions on their state returns over seven years.  This year, SB 7064 does that for the accelerate depreciation deduction but it also fully adopts the new federal change that makes the larger expensing deduction permanent.  It also adopts new federal due dates for the corporate income tax returns.  This is not really a tax cut, but it will cost the state $20 million as some payments that would have been made in FY 2016-17 will be made the following year.  SB 7064 was passed by the Finance & Tax Committee this week.  The piggyback provisions are also in the House tax package (HB 7099).

Renewable Energy Production Tax Credit – The current credit is allowed annually based on the taxpayer’s production and sale of electricity from a new or expanded Florida renewable energy facility. The credit expires next year.  SB 1272 would make the tax credit permanent and increases the annual cap on the total value of credits from the current $10 million to $15 million. It would also allow unused credit funding in a fiscal to be carried forward.    SB 1272 was approved by the Finance & Tax Committee this week.   A one-year extension of the credit—with no increase in the cap--is also part of the House tax cut package (HB 7099).

 

The full House also approved one bill and three proposed constitutional amendments relating to property taxes:

Exemption for Deployed Military Personnel –HB 7023 would add 11 military operations that qualify for the current property tax exemption for service members deployed in the previous year. The Senate companion (SB 160) is on 3rd reading.

Exemption for Disabled First Responders – HJR 1009 proposes an amendment to the Florida Constitution to allow the Legislature, as provided by general law, to exempt from property taxes first responders who are age 65 or older and totally, permanently disabled as a result of an injury or injuries sustained in the line of duty. The Senate companion (SJR 1194) passed Finance & Tax this week.

Homestead Exemption for low-income elderly - HJR 275 - Currently, local governments may provide a full exemption to low income elderly that are long term (25 year) residents. The value of the home can’t exceed $250,000.  If it is rises above that, the exemption is lost.  These proposed constitutional amendments provide that the $250,000 limit applies only at the time the exemption is acquired.  The elderly homeowner would not lose the exemption.  The Senate companion (SJR 488) is in its last committee - Appropriations.  

Save Our Homes “Recapture” BillHJR 7015 is a proposed constitutional amendment to repeal the recapture provision which allows the assessed value of homestead property to increase by the SOH cap, even if the market value falls, provided that the assessed value does not exceed the just value.  SJR 1074 is in the Appropriations Committee.  Florida TaxWatch is concerned this amendment would exacerbate inequities create by SOH.

 

Other tax bills that advanced in committee this week:

Sales Tax Exemption for Agricultural Items - SB 1264 and HB 1189 would exempt hog wire, nylon mesh, compressed or liquefied oxygen, and barbed wire from the sales tax.  It would also increase the current exemption for trailers used in agriculture from the first $20,000 of the sales price to 25,000.  SB 1264 was approved by the Finance & Tax Committee this week.

Local Option Sales Tax for Unfunded Pension Liability – HB 1297 and SB 1652 would allow a county to levy a local option sales tax of 0.5 percent to fund underfunded pension programs.  A county can only impose the surtax if the underfunded defined benefit retirement plan or system is below 80 percent of actuarial funding. Also the county must currently levy a local government infrastructure surtax which is scheduled to terminate and is not subject to renewal and the surtax does not take effect until the local government infrastructure surtax is terminated. Both bills passed committees this week.  The House bill further requires a county to place all new employees in a defined contribution plan to qualify to levy this new tax.

Revise the Millage Cap - HB 1015 and SB 1222 would change the way local governments determine their maximum allowable millage rate (without requiring a supermajority vote). Currently, the maximum millage rate that most non-school taxing authorities can levy by simple majority vote is a rolled back rate based on the amount of taxes which would have been levied in the prior year if the maximum millage rate had been applied, adjusted by the change in Florida per capita personal income.  These bills would base the rolled back rate on the amount of taxes actually levied in the prior year, adjusted for change in per capita Florida personal income.  This would in effect make the cap annual, not allowing local governments to build up a cushion between actual and allowable rates.  Florida TaxWatch understands the sentiment behind these bills, but is concerned they will put pressure on the governing bodies to levy the maximum rate or else lose the excess capacity.  A vote on HB 1015 was postponed in the Local and Federal Affairs Committee this week. The Senate bill is now in Finance & Tax.

Local Government Capital Funding - SB 660 and HB 735 provide that an existing impact fee may be used by a county, municipality, or special district to not only construct new capital facilities but to also improve, alter, or replace existing capital facilities. The bills also authorize a county or municipality to impose a local option documentary stamp tax in lieu of imposing an impact fee to finance capital improvements and facilities. SB 600 passed its first committee—Community Affairs—this week.  It was amended to raise the maximum doc stamp tax from a total of $1 per $100 for all jurisdictions in a county to $1 per $100 for each jurisdiction.

Special Assessment for Law Enforcement – HB 789 would allow municipalities to levy special assessments for law enforcement services.  The city must reduce the municipal ad valorem taxes for the first year of the special assessment levy and it loses the authority to levy the special assessment if it adopts an ad valorem millage rate in the future that exceeds the rate set in the first year. A committee substitute for HB 789 was approved by the Finance & Tax Committee this week.  The CS added provisions that require municipalities to hire a collection agency if delinquent revenues reach certain thresholds.  The Senate companion (SB 264) has not been heard.

Supermajority Vote for Local Tax Referenda - HB 791 requires any referendum to levy a discretionary sales surtax held during a primary or presidential preference primary election to be approved by 60 percent of electors voting. A referendum held on the day of the general election may still be approved by a majority of electors voting.  The bill also prohibits any referendum to levy a discretionary sales surtax from being held during a special election.  The bill cleared its final committee this week.  The Senate companion (SB 1100) has not been heard.

Education

The education bills that Florida TaxWatch is following include:

Student and Teacher Assessment – SB 1360 would allow school districts to voluntarily drop the current Florida Standards Assessment test and instead use national standardized tests like the SAT and the ACT as the basis for assessing student achievement.  The bills also provides for several alternative assessments and industry certifications as options for students to meet high school subject area, course, credit, and assessment requirements. It also calls for the renegotiation of existing student assessment contracts and negotiation of new contracts to implement the alternative assessments. The bill further exempts the performance of students with excessive absences from counting against a classroom teacher’s performance evaluation.  SB 1360 was approved by the Senate Appropriations Subcommittee on Education this week.  However, there is no House companion measure.

Open Enrollment – SB 669 would allow parents to enroll his or her child in any public school in the same district that has not reached capacity in the district.  Then, a parent could enroll their child in any public school that has not reached capacity in the state.  The bill passed the education Committee this week and now goes to the floor.

Principal Leadership - SB 434 and HB 287 create the Principal Autonomy Pilot Program Initiative. The Initiative is designed to afford provide highly effective principals of participating schools with greater autonomy to operate his or her school in a way that produces significant improvements in student achievement and school management. The Senate bill is in its last committee.  Last week, HB 287 was approved by the Education Committee and is now on 2nd reading.  The number of districts that will participate in the pilot has been increased from three to seven.  Florida TaxWatch honors a select group of outstanding principals each year as part of its Principal Leadership Initiative. 

 Class Size Reform – SB is now in the Appropriations Committee.   HB 149 revises the method for calculating the penalty for schools that fail to comply with the class size requirements at the school level average. The bill clarifies that a school’s compliance with class size is measured at the classroom level and that only the calculation of penalties is based upon the school average. The bill also requires the amount of the financial penalties to be expended in the schools that are out of compliance to achieve compliance. The bill also requires the district to publish, by school, compliance data and the compliance plan on the school district website and provide a copy of the compliance plan to the School Advisory Committee at all noncompliant schools. HB 149 has been placed on the Calendar and is awaiting a floor vote.  SB 1634, which deals with school choice, specifies that the calculation for compliance with maximum class size requirements for a specified district innovation school of choice is at the school level. The bill also requires the State Board of Education to review at a specified interval the performance metrics of each individual innovation school of choice for compliance with certain requirements. Florida TaxWatch has released a series of reports on the topic of maximum class size requirements.

STEM Teacher Loan Forgiveness ProgramSB 290 and HB 15 create a STEM Teacher Loan Forgiveness Program to encourage and incentivize qualified college graduates to remain in Florida and to teach a science, technology, engineering, or mathematics (STEM) course at a public school. SB 290 has been approved by the Senate Appropriations Subcommittee on Education.  The House bill has not been heard.

Economic Development

These are some of the economic development bills that Florida TaxWatch is following that advanced this week:

House Tax Cut Package – This week, the full House approved HB 7099 -- the House tax package.   It is a wide-ranging proposal that includes almost 40—mostly small--provisions.  Florida TaxWatch commends the House for including three provisions recommended by Florida TaxWatch:

Sales Tax Exemption for Manufacturing Machinery and Equipment – The bill will make the exemption--set to expire April 30, 2017--permanent, saving taxpayers $73.1 million annually. 

Business Rent Tax (BRT) – The bill would reduce the sales tax rate imposed on the rental of commercial property from six percent to five percent.  The tax will drop to 4 percent for one calendar year beginning January 1, 2018, then return to 5 percent.  The 1 percent reduction would save businesses $298.5 million annually.  

Research & Development Tax Credit – Businesses can receive an income tax credit of 10 percent of the increased R&D expenditures in Florida.  The House proposal would increase the cap from $9 million to $18 million for calendar year 2017.

For more information on all the provisions in the House Tax Cut Package see this Florida TaxWatch analysis.  

Other economic development bills Florida TaxWatch is following

Transportation Funding – SB 756 and HB 7027 are the Florida Department of Transportation’s (FDOT) legislative packages.  One of the provisions would create the FDOT Financing Corporation, authorizing the corporation to issue debt for the purpose of financing needed transportation projects.  This would be another tool for FDOT to maximize existing revenue, the department would still be bound by the current statutory cap on debt.  Florida TaxWatch has released a study highlighting the benefits of, and the need for, increased transportation funding in the state.  The full House has approved HB 7027 and SB 756 is on the calendar.

Seaport and Airport Funding – SB 756 and HB 7027 would also increases the funding for the Florida Seaport and Economic Development (FSTED) Program from $15 million to $25 million per year.  Florida TaxWatch research has shown the importance of seaport funding.  The full House has approved HB 7027 and SB 756 is on second reading.   HB 7061 creates the Florida Seaport Security Advisory Committee and the Seaport Security Grant Program, subject to legislative appropriation, to provide funding for the implementation of security plans and measures at Florida’s deepwater ports.  It also creates an aviation transportation and economic development program to finance airport transportation and facilities projects, and provides for a minimum of $15 million from the State Transportation Trust Fund to fund the program each year. HB 7061 has been approved by the full House. 

State Economic Development Programs – HB 1325 and SB 1646 are omnibus economic development bills that would make numerous changes to various state economic incentive and tax refund programs, including the entertainment incentive program, the Quick Action Closing Fund and the qualified targeted industry tax refund program.  Among the changes contained in the bill are the renaming of the Quick Action Closing Fund to the Florid Enterprise Fund.  The bills also lowers the required return on investment from 5 to 1, to 3 to 1, requires that projects create at least 10 jobs and requires that 20 percent of the award comes from local financial support.   This fund is a priority of the Governor, who recommended funding of $250 million.  The Senate has tentatively agreed to that amount. HB 1325 also creates the Innovation Florida Initiative to encourage high-technology startup and second-stage business growth.  Last year, Florida TaxWatch released a report that highlighted the benefits of second-stage companies.  This week, the Appropriations Subcommittee on Transportation, Tourism, and Economic Development approved a committee substitute for SB 1646. 

Smart Justice

These criminal justice bills that advance recommendations of the Florida TaxWatch Center for Smart Justice were heard in committees this week:

Prearrest Diversion ProgramsSB 618 and HB 1031 encourages local communities to implement diversion programs for certain offenders and enabling law enforcement officers to issue civil citations to adults in specific circumstances.  HB 1031 has passed the Criminal Justice Subcommittee.  SB 618 was passed by the full Senate this week.  Florida TaxWatch research has been cited during testimony on the bill.

Juvenile Criminal Records – A number of bills making it easier for juveniles to clear their criminal records are nearing becoming law.  SB 386, which decreases the period of time a minor’s criminal history record must be retained before expunction, has already been approved by the full Senate.   HB 147 lowers the age of automatic expunction of juvenile criminal records from 24 and 26 to 21 and is on the House calendar.  HB 293 and SB 700 exempt juvenile information compiled by the Criminal Justice Information Program from public records.  HB 293 was approved by Judiciary Committees this week. SB 700 was approved by the Criminal and Civil Justice Subcommittee this week.  

Mental Health Services in the Criminal Justice System – HB 439 and SB 604 look to expand the use of mental health and veterans courts and other diversion programs.  They expand eligibility for veterans, authorize creation of mental health court programs, allow county courts to order conditional release of defendant for outpatient care and treatment, creates a Forensic Hospital Diversion Pilot Program (FHDPP),   expand eligibility for certain pretrial intervention programs, and authorize pretrial mental health court programs for juvenile offenders. Florida TaxWatch research has shown the benefits of these courts as cost-effective diversion programs. SB 604 has passed the Judiciary Committee.  HB 439 was approved by its last committee—Judiciary—this week.  

Alternative Sanctioning - HB 1149 and SB 1256 create an alternative sanctioning program for technical violations of probation. A technical violation is a violation of supervision that is not a new felony offense, misdemeanor offense, or criminal traffic offense. The bill allows a judge to establish an alternative sanctioning program and determine which technical violations will be eligible for alternative sanctioning. An eligible probationer who commits a technical violation may choose to participate in the program and admit to the violation, comply with a probation officer’s recommended sanctions, and waive his or her right to a hearing on the violation. A probation officer’s recommended alternative sanction must be reviewed by the court, which may approve the sanction or remove the probationer from the program. This could save money by reducing arrests, incarceration of offenders pending technical violation hearings, and probation officer and court personnel time spent at violation hearings. HB 1149 was approved by the Justice Appropriation Subcommittee this week. 

 

Elderly Offenders - SB 7006 is the revival of the corrections package that died on the House floor last year. It contains numerous provisions, including two that advance Florida TaxWatch recommendations. The bill requires CJEC to develop projections on prison admissions and populations of elderly felony offenders.  An amendment to the bill passed that was passed by the Criminal Justice Committee this week, further requires DOC to report on the healthcare issues of elderly offenders.  Both of these provisions are consistent with recommendations made in our report, “Florida’s Aging Prisoner Problem.”

Sentencing and Gain Time - SB 7066 is a reevaluation of costly punitive practices implemented over the past several decades.  It requires certain drug possession offenders to be served through non-state-prison sanctions, allows courts to depart from mandatory minimums for certain nonviolent crimes, and alters the 85 percent rule by allowing nonviolent inmates to reduce their sentences by up to 35 percent.  The latter two components reflect TaxWatch recommendations as well as recommendations of the 2016 Government Efficiency Task Force.  The bill passed the Criminal Justice Committee this week.

 

Health & Aging

Heard in committee this week:

ARNP/PA Scope of Practice – The Florida TaxWatch Center for Health and Aging has released reports detailing the benefits of expanding nurse and physician assistant scope of practice.  A number of bills have been filed this session to allow ARNPs and PAs to order medication in certain circumstances. Currently, Florida is the only state not allowing these individuals this authority.  HB 977 and HB 1241 are both on 2nd reading in their respective chambers.  SB 946 passed the Health Policy Committee this week. Florida TaxWatch has presented our research findings before to several committee.

 

Other CHA Priority Bills

Telehealth – Another priority of the Florida TaxWatch Center for Health and Aging (see report) is telehealth, which involves providers using the Internet and other technology to care for patients remotely.  It can increase access to health care in areas such as rural communities.  SB 1686 authorizes health care practitioners to use telehealth and creates a Telehealth Task Force within AHCA to analyze and make recommendation concerning telehealth.  HB 7087 opens up access to telehealth services by licensed health care professionals.  Professionals outside of the state may also provide telehealth services to Floridians if they register with the Department of Health (or applicable board), meet requirements, and pay a fee.  They would be prohibited from opening a physical office/offering in-person services in Florida, but would otherwise be able to practice within the relevant scope of practice established by Florida law and rule.  Both bills passed committees this week.

Behavioral Health Services - HB 7097 and HB 979 seek to further align the Marchman and Baker Acts, as well as implement coordinated receiving systems and county transportation systems.  These two bills include TaxWatch recommendations, calling for data driven funding and raising the age of transition for SAMH services from 18 to 21.  SB 12 seeks to improve mental health and substance abuse programming in Florida, and creates a single, consolidated license to provide both mental health and substance use disorder services.  SB 1336 directs behavioral health managing entities to develop a plan with each county or circuit to ensure all persons with mental health or substance use disorders subject to involuntary admission receive prompt assessment of their needs for evaluation and treatment. The Health Care Appropriations Subcommittee passed HB 7097 this week.  SB 12 is in its last committee -- Appropriations. SB 1336 was approved by the Appropriations Subcommittee on Health and Human Services this week.

 

Government Efficiency

The following are bills addressing cost saving and efficiency recommendations from Florida TaxWatch and the Center for Government Efficiency:

Pension Reform – HB 7107 would make the investment (defined contribution) retirement plan—instead of the pension (defined benefit) plan the default plan for new state employees in the Florida Retirement System.  If the employee does not make an election during the first 8 months (the bill increases it from 5 months), the employee would be enrolled in the investment plan.  The bill was approved by the State Affairs Committee this week.

Public Records – SB 1220 and HB 1021 amend current law to provide that in a public records enforcement lawsuit, a court may, but is not required to, award reasonable enforcement costs, including attorney fees, to the complainant if the court determines the agency unlawfully refused to provide a public record. To be awarded such costs, the bill also requires a complainant to provide written notice of the public records request to the agency’s records custodian at least 5 business days before filing the lawsuit.  HB 1021 was approved by the Government Operations Appropriations Subcommittee last week, with Florida TaxWatch research being citing during the debate.  SB 1220 was approved by the Judiciary Committee this week, with a committee substitute that is more closely aligned with Florida TaxWatch recommendations. The amendments expand the instances in which the court may not award costs and fees to include instances in which the request was malicious, reasonably intended to harass the agency, or brought to primarily cause a violation of the public records request laws or if the alleged delay or error was a technical violation that amounted to harmless error.

HB 273 requires requests for public agency records relating to contracts for services to be made directly to the public agency and revises several provisions in agency contracts for services related to public records.  After passing the full House last week, HB 273 has passed both chambers and now goes to the Governor.

Florida TaxWatch released its report on predatory public records abuses earlier this session, offering recommendations to prevent malicious and frivolous lawsuits while protecting taxpayer's rights to government in the sunshine. These recommendations include educating government employees on the public records laws, creating a requirement to give notice to an agency of the intent to sue prior to civil litigation and permitting public agencies to recover their attorney fees and related costs if the court determines that the public records request is frivolous or serves no legitimate public purpose or interest. 

Centralized State Vehicle Fleet – SB 356 and HB 1341 require the Department of Management Services (DMS) to prepare a plan regarding the centralized management of state-owned motor vehicles. DMS must evaluate the costs and benefits of operating and maintaining a centralized motor vehicle fleet compared to the costs and benefits of contracting with a third-party vendor for the operation and maintenance of a centralized motor vehicle fleet.  This is a long-time recommendation of the Florida TaxWatch Center for Government Efficiency.  SB 356 was approved by the Appropriations Subcommittee on General Government this week and Florida TaxWatch testified on our research on the issue.  HB 1341 is in the Appropriations Committee.  In addition, both the House and Senate Appropriations bills include $1.8 million for DMS to procure a commercial solution to replace the state’s current fleet management system.

Sale of Surplus State Land – HB 359 and SB 546 make it easier and more efficient for water management districts to sell surplus land. The bills authorize water management districts to sell parcels of land valued at $25,000 or less through an expedited process and make other changes to make the process more efficient.  SB 546 was passed unanimously by the full Senate this week.  The House bill is in the Agriculture & Natural Resources Appropriations Subcommittee.

Municipal Power Regulation – HB 579 would impose additional transparency and accountability requirements on the Florida Municipal Power Agency, as recommended by Florida TaxWatch.  The bill was been approved by two committees.  Florida TaxWatch presented its findings to the committee and our research was cited several times during testimony and debate on the bill.

Government Efficiency - SB 7052 requires the Governor to develop government efficiency recommendations on an annual basis and to submit them to the Legislature for consideration as part of the General Appropriations Act. State agencies are required to report quarterly regarding the implementation of the recommendations and any cost impacts for the first two years. This is a longtime Florida TaxWatch recommendation and is a recommendation of the Government Efficiency Task Force and is included in the Task Force’s January 2016 Interim Report. The bill has been approved by the Senate Governmental Oversight & Accountability Committee. Florida TaxWatch spoke in support of the bill and the good work of the Task Force.

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Media Inquiries:  Contact Joe Follick by Email or Cell: 850.212.5052

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Contact Joe Follick by Email
or Cell: 850.212.5052

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