Economic Development

LEGISLATION THAT PASSED 

Data Centers – SB 484 begins the regulation of data centers, but it is likely this will be revisited in the future sessions. The rapid growth in artificial intelligence, cloud computing, and streaming has created a very large need for very large data centers. States are looking at how to best regulate this industry and Florida is no exception. Data centers need large amounts of electricity and water to operate and the bill shields residents and businesses from paying for some of the utility costs by ensuring large load customers cover the full cost of their service. The bill also strengthens water permitting, including requiring data centers to use some reclaimed water. The bill directs OPPAGA to contract for an independent, interdisciplinary study of policy considerations related to the construction and operation of large-scale data centers. The House amended the Senate bill to remove a prohibition on local governments entering into non-disclosure agreements with data centers but left a prohibition of a 12-month extension. The bill went through floor amendments. The final bill retains local government control of where data centers can be located. Earlier versions had state limitations on data centers’ proximity to schools or residences. The Senate concurred with the House changes.

LEGISLATION THAT DID NOT PASS

Rural Renaissance – A priority of President Albritton, the Senate passed rural economic development legislation early last session, only to see it die on the vine as the dysfunction between the House and Senate came to a head at the finish. The Senate is trying it again with SB 250, a wide-ranging bill that creates opportunities for rural communities to improve infrastructure, expand education offerings, increase health care services, and modernize commerce. SB 250 also invests in farm-to-market roads to support Florida’s vital agricultural supply chain. The bill creates the Office of Rural Prosperity, and two new grant programs benefiting rural communities: the Renaissance Grant Program and the Public Infrastructure Smart Technology Grant Program. The bill appropriates more than $200 million and redirects millions to transportation and affordable housing projects in fiscally constrained counties.  For more on the bill see this summary. The full Senate unanimously passed SB 250 on the second day of session. The House had its own rural development bill (HB 723), but it is a far more modest proposal (11 pages vs. 138 pages).  With the Speaker saying the House would not take up any bill that did not move in the House, the Senate President’s priority did not pass for the second year in a row.

Artificial Intelligence (AI) Bill of Rights – SB 482, a priority of Governor DeSantis, would have provided some protections from AI for Floridians. The legislation would give parents the right to control children’s interaction with chatbots, require chatbots to remind users it is not human and to take breaks, restrict AI companies from selling or disclosing personal information, and establish rules about the unauthorized use of people’s names, images or likenesses. Parents would also be required to give consent for minors to use AI platforms. The bill was amended to prohibit students below sixth grade from using AI, unless supervised by school personnel, or used by students with disabilities or those learning English as a second language. President Trump wants national regulation of AI.  After being postponed on Special Order four days in a row, SB 482 was approved by the Senate. The House did not take up the Senate bill, as it preferred to follow the federal government’s lead.

Space Florida – HB 1177 would have further supported the space flight industry which has had a very successful year with commercial launches. The bill would give Space Florida more flexibility in procurement when using non-state funds. The bill had provisions to create a sales tax exemption for tangible personal property, including machinery and equipment, that is leased by Space Florida to private entities and to extend the governmental property tax exemption to property being used by a private lessee pursuant to a project authorized by Space Florida. HB 1177 removed the exemptions and added provisions including vesting daily operational oversight of each spaceport with the spaceport director or commander and retaining statewide strategic and financing responsibilities for Space Florida. It also required Space Florida to coordinate with state and local entities to develop and promote “quintimodal” transportation hubs, which are interconnected transportation facilities that can move people or property by means of road, railroad, airport, seaport, and spaceport facilities.  Florida TaxWatch released a report detailing how under Space Florida’s leadership, Florida’s Space Coast has transitioned from a government complex to a vibrant commercial, market driven enterprise that can also support federal government missions. The report concludes that Florida’s Space Coast is well-positioned to dominate the future of the aerospace industry. The Legislation could have helped in this effort. HB 1177 passed the full House but the Senate did not take it up. The House tax package, when it still existed, included the tax exemptions for Space Florida.

Manufacturing – SB 528 and HB 483 would have required the Department of Commerce to encourage and oversee manufacturing in this state and creates a Chief Manufacturing Officer to coordinate efforts. The bills would have created the Florida Manufacturing Promotional Campaign to expand consumer awareness, market exposure, and entrepreneurship for manufactured products in Florida through an optional branding and marketing initiative. Another provision established the Florida Manufacturers’ Workforce Development Grant Program to support small manufacturers with new technologies or cybersecurity infrastructure and provide workforce training support. Florida TaxWatch has produced voluminous research on the importance of manufacturing and supports these efforts which are consistent with past recommendations. Similar legislation last session passed the Senate and made it to the House floor. Despite some momentum early in the session, neither bill made it out of committee.

Research & Development Tax Credit – SB 1076 would have increased the cap on the total annual amount of Research and Development Tax Credits from $9 million to $50 million. Florida TaxWatch has long supported increasing the cap. There have been past increases, but they have only been temporary. Similar legislation last session cleared one committee but then stalled. This session was a rerun. SB 1076 passed the Senate Commerce & Tourism Committee. This bill died but hopefully the R&D credit can be included in the tax package in conference. It was not included in the original versions.

Tourist Development Taxes – Florida TaxWatch has warned of the “slippery slope” created when the Legislature adds additional authorized uses for this local sales tax surcharge revenue, diverting revenue from its original intended purpose—tourism promotion. Several recent sessions have resulted in expanding the uses of TDT revenue, including last year’s legislation that allows all coastal counties to use them for beach lifeguards and fiscally constrained coastal counties to use them for capital improvements to public buildings. This session, bills have been filed to reduce the percentage of TDT revenue required to be spent on tourism promotion from 40 percent to 20 percent (SB 458), eliminate any required promotion spending (SB 454/HB 6007), and add public safety and affordable/workforce housing (SB 456)and commuter rail (SB 976) to the allowable uses. Florida TaxWatch has historically supported using TDTs for tourism promotion and our research has shown that elimination of funding for promotion will hurt tourism and therefore the economy. None of these bill have advanced.