Michael Moline – Page 3 – Florida Politics

Michael Moline

Michael Moline is a former assistant managing editor of The National Law Journal and managing editor of the San Francisco Daily Journal. Previously, he reported on politics and the courts in Tallahassee for United Press International. He is a graduate of Florida State University, where he served as editor of the Florida Flambeau. His family’s roots in Jackson County date back many generations.

Insurance lobby pulls knives out for ‘retroactive denial of claims’ bill

An attempt in the Florida House to scale back legislation targeting retroactive denials of medical insurance claims hasn’t exactly mollified the insurance lobby.

A string of lobbyists representing health carriers testified during a recent committee hearing against HB 217 by Boca Raton Republican Bill Hager, notwithstanding an amendment restricting its provisions to policy grace periods — generally, the 30 days when a policy is in effect but the policyholder might not yet have paid the premium.

SB 162 would forbid the practice at any time.

Insurers would have to verity a patient’s eligibility at the time of treatment. The idea is to prevent carriers from giving the OK to treatment and then demanding repayment from the policyholder or treatment provider.

Asked during the hearing before the Health Innovation Subcommittee why he proposed the amendment, Hager was straightforward: “Because I want the bill to pass.”

Efforts to ban the practice go back years and, in the past, the insurance industry has worked with legislative sponsors. Paul Sanford, representing Florida Blue and the Florida Insurance Council, told the panel that his organization has not done so this year.

The committee approved the amendment and passed the bill, which still faces tests before the Appropriations and Health & Human Services committees.

The Affordable Care Act — or “Obamacare” — featured prominently in the discussion. Critics warned that Hager’s bill would enshrine in Florida law language similar to ACA regulations against retroactive denials.

“If this bill becomes law, you will have codified one of the ACA’s most controversial provisions — the idea of free health insurance,” said Wences Troncoso, general counsel of the Florida Association of Health Plans. In effect, he said, consumers could acquire 30 days of free health care per year.

“This is an expansion of Obamacare here in the state of Florida,” said Brewster Bevis of Associated Industries of Florida, which has made killing the legislation a top priority.

Miami Democrat Nicholas Duran found it a bit much.

“It makes me scratch my head how quickly we use the words ‘Obamacare’ and ‘ACA’ and boom — this thing’s already poisoned,” Duran said.

The bill eventually received two ‘no’ votes, from Jacksonville Republicans Jason Fischer and Clay Yarborough.

Fischer, for example, argued the measure would let people “legally defraud a system and allow someone to get their claims paid but not actually pay their bill.”

Mark Dobbertien of the Florida Medical Association said the amended bill still would represent “a small step forward,” but “would significantly limit the scope of the bill to a small subset of claims. In a large majority of instances, the insurers would still be able to retroactively deny that claim.”

“If an insurance company makes a promise, it should keep the promise,” Hager said.

New report: PIP repeal could cost motorists

Repeal of Florida’s no-fault auto insurance system would drive the cost of coverage up by 5.3 percent, or $67 per year, according to an analysis conducted for the Property Casualty Insurers Association of America.

The findings assume that more drivers will buy underinsured and uninsured motorist coverage to protect themselves against motorists who skip purchasing insurance for themselves, according to the report (available here).

Indeed, motorists who buy full coverage would see increases of 7.3 percent, or $150 per year. Those who buy only mandatory coverage would see increases of more than 72 percent, or $340, on average.

A bill (HB 19) by Vero Beach Republican Erin Grall, which cleared the House on a vote of 88-19 on Jan. 12, would repeal Florida’s personal injury protection, or PIP, insurance mandate. The Senate version (SB 150) by Brandon Republican Tom Lee, is pending on the floor.

The findings contrast those of a similar study last year for the Office of Insurance Regulation by Pinnacle Actuarial Resources, which estimated repeal would save policyholders 8.1 percent in liability coverage rates, but only 5.6 percent overall, as exposure shifts to lines including medical insurance.

The new analysis, conducted for PCI by the consulting firm Milliman Inc., focused on the House language, which would repeal the PIP mandate but require motorists to carry $25,000 per person and $50,000 per accident in bodily injury liability coverage, plus $10,000 for property damage liability, beginning next year.

The Senate language would $20,000 per person and $40,000 per occurrence in bodily injury coverage and mandatory medical payments coverage of $5,000. Those coverage levels ratchet up to $30,000 per person and $60,000 per incident after three years.

Requiring medical coverage at that level would add another 9.2 percent, or $116, for the average drive, Milliman’s study concluded.

Driving the increases are the addition of PIP losses previously covered by co-insurance; the addition of non-economic damages shifted from PIP to bodily injury and uninsured motorist lines; and the increase in coverage benefits related to the higher mandatory bodily injury coverage.

The report notes that these higher could be lessened by between 14 percent and 16 percent if the Legislature also passes a “no pay, no play” law, barring claims against insured drivers by uninsured drivers; and set time limits and communications requirements for filing insurance claims, to weed out bad-faith demands.

Update: Paul Jess, executive director of the Florida Justice Association, representing trial attorneys, issued a statement denouncing the analysis as “so fundamentally flawed on several levels that it has no credibility.” He cited a disclaimer contained in the document:

“[D]ue to the uncertainty involved in projecting future events, it is likely that the actual results will vary from our projections, perhaps materially. There may be greater uncertainty involved in our analysis as we have relied on a survey of PCI members for several key assumptions. To the extent the participating members do not represent an unbiased sample of the entire market of personal auto insurers in Florida, our results may be biased as well.”

The findings are out of line with savings realized in Colorado, Connecticut, and Georgia following PIP repeal, Jess said.

“The report fails to account for fraud savings that would be realized by replacing the PIP system with a responsibility-based approach. The ‘findings’ don’t even track Florida’s Office of Insurance Regulation’s own data from just over a year ago,” he said.

“The insurance corporations that paid for this report apparently are afraid of Florida embracing a new approach that promotes the principles of individual responsibility and accountability.”

Citizens paid premiums to entice adjusters after Hurricane Irma

Pay rates for insurance adjusters jumped by up to 30 percent as Citizens Property Insurance Corp. scrambled to respond to claims following Hurricane Irma, the carrier’s Consumer Service Committee learned Thursday.

The hikes were prompted by competition for trained adjusters with Texas, still recovering from Hurricane Harvey when Irma hit Florida on Sept. 10. Texas had boosted payments to adjusters, including bonuses, chief claims officer Jay Adams said.

“We were trying to equal the market rate they were paying in Texas, so that we could get adjusters … to come to Florida to work for Citizens,” he said.

Rates have since returned to their pre-Irma baseline.

Citizens engaged an outside contractor, Worley Claims Services LLC, to oversee a crash training program that armed newbie damage estimators with smart devices containing software designed to assist in assessing damage.

The committee met on the final day of the 2017 hurricane season, which saw nearly $6 billion in damage in Florida. Citizens, Florida’s property insurer of last resort, estimated that it has closed nearly two-thirds of the 62,000 claims filed against its policies.

Before Irma hit, Citizens had estimated it would need 2,500 adjusters. It had 800 contractors on hand following the storm. Scrambling allowed the carrier to assemble a strike force of 1,500.

“We leveraged every piece of technology we could to help respond to this event,” Adams said. That included the use of drones to survey damage in the Keys and Miami, which returned assessments within 72 hours.

The company also paid adjusters to work extended hours and weekends.

“We wanted people that were here, already on the ground,” Adams said.

The company looked for emergency licensed adjusters approved by the state.

“We also targeted folks that were displaced by the storm because of the storm from their jobs, such as realtors, home inspectors, and we even had some agents who engaged in this program to help support us,” Adams said.

Citizens expects to receive an additional 10,000 Irma claims by the time the dust clears, with all claims totaling $1.2 billion. Industry-wide, Irma has produced 830,788 claims and more than $5.8 billion in property damage.

“With $6.4 billion in surplus and substantial reinsurance coverage, Citizens remains fiscally sound after responding quickly and effectively to Hurricane Irma,” Chris Gardner, chairman of Citizens’ Board of Governors, said in a written statement.

House pressing on with workers’ comp reform

A ‘clean’ workers’ compensation bill is headed to the House floor after the Commerce Committee rejected a series of amendments pitched as worker-friendly Tuesday.

The bill (PCB COM 18-01) cleared the panel on a vote of 18-8.

It closely follows legislation the full House approved during the spring Legislative Session, in that it encourages injured workers and carriers — and their attorneys — to attempt to resolve disputes amicably.

But workers’ comp insurance premiums have fallen sharply since the spring’s panic over last year’s 14.5 percent increase in rates. The Office of Insurance Regulation approved a decrease of 9.5 percent just last week.

“Last session, the logic was, ‘We’re in crisis.’ The logic this session is, ‘Let’s be proactive.’ I understand that those are two good reasons, but they are separate and distinct,” Tampa Democrat Sean Shaw said.

Bill sponsor Danny Burgess, a Zephyrhills Republican, warned that the decrease doesn’t mean Florida, and companies that rely on consistent workers’ comp rates, are out of danger.

It reflects two years of declining insurer costs; it does not yet reflect Florida Supreme Court rulings last year scrapping the statutory limit on attorney fees and some total disability payments, he said.

“We won’t know what that looks like until 2019. But we do know that fees and hourly (attorney) rates have gone up about 191 percent,” Burgess said.

The committee rejected a series of amendments on voice votes, including ranking Democrat Evan Jenne’s bid to eliminate the bill’s $150 per hour limit on attorney fees, subject to a judge’s approval.

Jenne warned the high court might eventually rule the limit unconstitutional, as it did the statutory fee limits.

The amendment would cause rates to spike, as they did before the Legislature imposed drastic reforms on the system in 2003, Burgess said. The court rulings represented rejections of key elements of those reforms as unfair to workers.

“We need certainty and stability in our economy and in our market, and we don’t have that right now,” he said.

As was the case earlier this year, the bill pits labor unions, trial attorneys, and medical providers against the carriers, and their business allies.

The committee action leaves the House essentially where the chamber left off last year, before tentatively offering the Senate to raise the maximum attorney fee to $180 per hour.

“We have a solid product. It passed. It struck a balance. We’ve created some meaningful reform. I don’t know that we’ll ever strike a balance that everybody agrees with. But it’s our job to determine what that balance should be,” Burgess said.

National Federation of Independent Business Florida director Bill Herrle issued a written statement indicating no appetite for further concessions.

If the proposed committee bill “represents a final bill, then it deserves our fair consideration,” Herrle said. “If it represents just an opening bargaining position, then we’ll probably end up with a bill we cannot support.”

Trial lawyer Mark Touby, president of Florida Workers’ Advocates, saw a glass half full.

“Lawmakers have an opportunity to provide a constitutional approach to workers’ compensation reform that would bring rate stability to the market, increase transparency in ratemaking, spur free-market competition among insurers, and enhance benefits for injured workers. Unfortunately, the legislation passed by the House Commerce Committee would turn the workers’ compensation grand bargain to protect injured workers into a grand illusion,” he said in a written statement following the vote.

“As lawmakers consider this important issue, we will continue to work to ensure that increased competition, more transparency, and other essential components of meaningful workers’ compensation reform are included in any legislation that ultimately passes,” Touby said.

House AOB package clears committee despite some qualms

House assignment of benefits (AOB) legislation cleared its sole committee Tuesday and appears headed to the floor, despite reservations about its limits on attorney fees and lack of language directly sanctioning insurance fraud.

Judiciary Committee members also expressed skepticism about insurers pressing policyholders to accept their preferred vendors before approving the bill (PCB JDC 18-01) on a 13-5 vote.

“Once again, we end up in this room dealing with the actions of bad actors,” Rep. Erin Grall observed.

She complained that it’s not clear the legislation would allow policyholders and legitimate repair contractors to secure legal representation against low-ball claims offers by insurance companies — or would even solve the problems it seeks to address.

“The bad actors will be able to do the math in order to get paid at the end of the day. The insurance companies will be able to figure out the math to either pay claims or not pay claims,” said Grall, a Vero Beach Republican.

Echoing another point that Grall made, Democrat John Cortes objected to insurers pressuring policyholders to accept vendors of their choosing.

“It kind of irks me that I have to sign a piece of paper and then the insurance company undercuts me, then I have to sue my insurance company to get the money that’s owed,” he said. “How do I win?”

The legislation contains essentially the same language as a measure that cleared the House during the spring Legislative Session. A less industry-friendly version stalled in the Senate, but that panel is debating reforms including mandatory arbitration in AOB disputes.

The insurance industry and its business allies blame a spike in AOB litigation on fraud and other abuses. Attorneys and contractors blame bad faith largely by a limited number of insurers that make inadequate claims offers or delay responding altogether.

The House bill would attack the problem by imposing deadlines on contractors to file notices and invoices, and on insurers to respond. It would encourage parties to settle disputes out of court by limiting either’s ability to recover attorney fees, depending on how far out of whack settlement offers are from final judgments.

Panama City Republican Jay Trumbull is carrying the legislation this year, taking over from Tampa Republican Jamie Grant, who ushered last year’s version through lengthy hearings before the Insurance & Banking Subcommittee and full Commerce Committee.

Trumbull was unaware of any additional committee hearings ahead of the 2018 session, but said members are fully aware of the arguments, he said. “There are some members who still have some concerns,” he conceded following the vote.

The main idea, he added, is to subject contractors to both the obligations and benefits provided by insurance policies they seek to enforce, rather than just the right to sue and recover attorney fees.

“I do believe that this bill is going to curb the issues of fraud. You’re going to have the bad actors who aren’t going to go through some of the hoops that we have created,” he said. But “we want to make sure the assignee (contractor) stands in not one but both shoes of the insured.”

“There is a reason why we went from 1,400 claims in 2014 to 28,000 claims in 2016 — and it’s not because it’s been raining harder,” committee Vice Chair Shawn Harrison said during debate.

“Everyone knows there’s a problem.”

House PIP repeal legislation clears its only committee

Legislation to repeal Florida’s no-fault auto insurance system handily cleared the House Commerce Committee Tuesday — the only committee slated to consider the measure.

The vote was 17-8, and support for the measure was bipartisan — even though some members confessed to qualms about overturning an insurance system that has prevailed since 1971.

“I know that this is a major change for Florida,” and that interest groups disagree about whether it’s a good idea, bill sponsor Erin Grall said.

“I would really like to see us make this change and see what the true rates are under a mandatory bodily injury system before we start to address the boogey man in the room.”

Pressure has been building to repeal no-fault — marked by mandatory personal injury protection, or PIP coverage — for years. Largely that’s due to rising premiums widely blamed on fraudulent claims.

HB 19, the Responsible Roadways Act, would repeal Florida’s mandatory PIP law effective Jan. 1, 2019. Instead, motorists would buy a minimum of $10,000 per person and $25,000 per incident in bodily injury coverage. Disputes over accidents would be decided in the courts.

The minimum coverage for property damage would be $10,000, or $30,000 in combined bodily injury and property damage policies. Policies already in effect would carry over until time for renewal. Similar legislation easily cleared the House during the spring Legislative Session. A Senate companion died in committee.

For 2018, legislation filed by Sen. Tom Lee would require bodily damage coverage of $20,000 per person and $40,000 per incident, plus $10,000 for property damage and $5,000 for medical payments. Additionally, the bodily injury coverage minimum would ratchet up every two years until it reaches $30,000 per person and $60,000 per incident.

Pinnacle Actuarial Resources has estimated repeal would save policyholders 8.1 percent in liability coverage rates, but only 5.6 percent overall, as exposure shifts to lines including medical insurance.

A parade of insurance industry representatives seemed sympathetic to what Grall hopes to accomplish, but declined to endorse her bill as written.

Mostly that was because they want the Legislature to rein in third-party claims, filed against covered motorists by people claiming accident injuries, alleging bad faith by insurers. Medical providers, meanwhile, fear swapping guaranteed payments under PIP for taking their chances in the courts.

Ninety-five percent of bad-faith claims are due to low-value policies, Grall said. Yet the average costs associated with traffic accidents are in the $16,000-$17,000 range — easily manageable with a $25,000 coverage minimum.

She also acknowledged the bill would require medical providers to change their business models.

“I understand that it’s going to be difficult and that change is hard. However … we will have more adequate levels of coverage for the severity of accidents on our roads.”

Contractors consider compromise in assignment of benefits battle

Corporate America has long looked to alternative dispute resolution — ADR, including mediation and arbitration — to avoid costly litigation.

Might that be a solution to Florida’s assignment of benefits (AOB) debate?

The Senate Banking & Insurance Committee is considering it. Sha’Ron James, Florida’s public advocate for the insurance industry, suggested ADR during recent hearings.

Assignment of benefits “allows a third party to be paid for services performed for an insured homeowner who would normally be reimbursed by the insurance company directly after making a claim,” as James’ website defines it.

The dispute over AOB pits insurers against repair contractors and attorneys. Insurance companies accuse contractors of inflating repair bills; contractors blame insurers for low-balling payout offers. The problem is particularly acute in Miami-Dade, Broward, and Palm Beach counties.

We asked Foyt Ralson, a lobbyist representing the Florida Association of Restoration Specialists, and Dave DeBlander, owner of Pro Clean Restoration and Cleaning in Pensacola, whether ADR would be a good idea.

Q: ADR — Good? Bad? Indifferent?

Ralston: Ultimately, the devil is in the details. We’re certainly open to discussing that and seeing what it would look like.

Q: Did they make progress here today?

Ralston: We’ve come a long way in the discussion overall — not just in the past two committee meetings, but over the past few years. We’ve gotten away from a very simplistic view of where the problem is.

We have a number of companies that have been able to come up here and show the Legislature that an arbitrary across-the-board elimination of a tool, AOB, is not necessarily the solution to the problem.

Q: That we’ve been arguing over the wrong thing?

Ralston: We have, absolutely.

Q: And the right thing is?

Ralston: Insurance companies and contractors need to be able to talk. They need to be able to do it in a timely manner, to be able to adjust a claim properly. That’s how it used to be done, and that’s how it should be done now.

Q: It sounds like it’s a handful of law firms and contractors in one corner of the state driving this.

Ralston: The data have been pretty clear. It is a handful of insurance companies in the Tri-County area of South Florida that are causing the majority of the problems. If that’s where the problem is, that’s where the lawsuits are going to exist.

Q: Could you live with mandatory arbitration?

DeBlander: The problem with arbitration is that it costs money. They charge for it. I file $800, $1,700 (repair) bills. My claims are accurate. They’re true. I should get paid for them.

Ralston: If you have those conversations happening between the insurance companies and the contractors on the front end, and the claims are being adjusted, the sooner that happens, the less need there is for arbitration, lawsuits, the fewer disagreements there are going to be. We’ve got to get insurance companies’ adjusters out to the claims as soon as possible.

DeBlander: With the good insurance companies, we work it out. I don’t want to have to arbitrate with these really fraudulent, bad insurers. It’s their modus operandi. That’s how they operate, to shortchange the bill. Arbitration is not a fix.

Q: That was another focus of the committee members — they wanted to see whether they could target the bad actors.

DeBlander: Yes — the bad actors on both sides. The bad actors among the insurance companies — they’re driving the lawsuits. It’s a handful of the same insurance carriers. I don’t think there are that many bad restoration companies. If there are, we can deal with them.

Senate committee considers sending AOB disputes to mandatory arbitration

Alternative dispute resolution emerged as a possible solution to the political dispute over assignment of benefits, or AOB, agreements during a hearing Tuesday before the Senate Banking & Insurance Committee.

Sha’Ron James, Florida’s insurance consumer advocate, raised the possibility as the committee members questioned representatives of the trial bar, the insurers, contractors and other parties.

“I’m definitely a proponent of encouraging alternative dispute resolution, arbitration or mediation,” James said.

Disputes between AOB holders and insurers center not on broad principles but on dollar amounts that arbitrators are well-positioned to sort through, James said.

“If we encourage alternative dispute resolution, it would deter litigation, which is where a lot of the exorbitant legal fees are coming from,” she said.

Committee members, including chairwoman Anitere Flores, seemed open to the idea, although Flores said the details would have to be worked out.

“What would an alternative dispute resolution (system) look like? What would mediation look like? Are there precedents for other arenas where there is a formal mediation (system)?” she said.

It was the second time the committee invited the antagonists, plus Insurance Commissioner David Altmaier, to seek consensus. A similar process produced legislation that passed the House during the spring Regular Session. The issue never reached the floor of the Senate.

One key sticking issue is fees for plaintiffs attorneys in disputes against carriers. SB 62, filed by Sen. Dorothy Hukill, would eliminate attorney-fee awards to parties suing insurers under those AOB agreements. Altmaier, the carriers and other observers blame abuse of such litigation for escalating property insurance rates.

“I expect that, before the bill-filing deadline, there might be a couple more pieces of legislation,” Flores said, adding that Senate President Joe Negron has been discouraging the filing of committee bills.

“This might be an example where what we’re trying to come up with is a consensus product that a majority of the committee members can get behind. Procedurally, what that would look like, I think we’re not 100 percent sure of,” she said.

“But my goal is certainly for there to be in this committee a bill that incorporates the ideas and the alternatives that we’ve heard here.”

Flores believed the hearing produced progress.

“While it was painful at times and certainly frustrating, there were some things that came out,” Flores said. The task now, she continued, is to settle the details.

“Other chairmen have sat in this chair, much smarter than me. And more experts have said they want to find a solution to this issue. We’re going to give it our best shot. Whether or not we get it right, guess we’ll find out at the end of Session.”

Flores wanted assurances that, whatever the committee does, rates will go down.

“I would be hard-pressed to support some of the more extreme solutions unless there is an actual result that would be beneficial to our constituents,” she said.

Sen. Oscar Braynon concurred, saying he’s been assured in the past that legislation would fix high insurance rates only to see a fresh scapegoat emerge.

“I don’t want to sit here and go through this exercise without us actually looking at how we solve the problem, which is higher rates for consumers,” he said.

Christine Ashburn, chief lobbyist for Citizens Property Insurance Corp., sought to assure committee members that cracking down on inflated water mitigation claims and related lawsuits would produce results.

“If we could get back to the averages we have seen for many, many years, the majority of our customers would stop seeing rate increases, and many of them would begin to see rate decreases,” she said.

Flores said that high insurance premiums have been her constituents’ top concern through the 16 years she’s served in the Legislature.

“How do we address this issue in a way that it doesn’t bubble up to become another issue somewhere else?” Flores said. “That might be biting off more than we can chew, but I’d like for us to at least try.”

Too soon to know? Regulators weigh worker’s comp rates

Regulators pressed representatives of a workers’ compensation insurance rating service Wednesday about whether two Florida Supreme Court rulings had in fact increased the cost of administering claims, as many had feared.

The answer: Still too soon to say.

Nor is it clear that carriers adjusted their reserves or other practices in response to the rulings to any degree of consistency.

“At this point, the data is too immature,” said Jay Rosen, senior actuary for the National Council on Compensation Insurance, which proposed rates for around 240 Florida carriers.

“Not much of the data that has been impacted by these court decisions has been reported to NCCI, and therefore it is not reflected in this particular rate filing,” Rosen said.

Rosen and other NCCI representatives said the 9.3 percent average premium rate drop the council has proposed is mostly driven by a downward trend in payouts to injured workers. In other words, notwithstanding the court, workplaces have been safer.

“This is really the major driver behind this proposed rate decrease,” said Jeff Eddinger, an executive with NCCI.

If approved by the Office of Insurance Regulation, the new rates would take effect on Jan. 1

The office approved a 14.5 percent average premium increase last year, blaming Florida Supreme Court rulings in Castellanos v. Next Door Co. and Westphal v. City of St. Petersburg that critics said would encourage litigation by claimants.

Steve Alexander, an actuary who studied NCCI’s numbers for Florida Workplace Advocates — that is, plaintiffs’ lawyers — argued NCCI’s proposal didn’t reflect carriers’ investment earnings. He suggested a rate decrease of 15.4 percent, plus the opportunity for insurers to deviate from NCCI’s rates or to earn discounts.

Insurance Commissioner David Altmaier said following the hearing that he’ll consider those options, and otherwise look for ways to stabilize Florida’s workers’ compensation premiums.

Advocates president Mark Touby underscored Alexander’s argument in a written statement.

“The lack of transparency throughout NCCI’s process portrays the perception that its analysis is outcome-driven — rather than based on an unbiased presentation of the data,” Touby said. “What is clear is that NCCI’s unpredictable rollercoaster ride of rates is unquestionably bad for Florida’s businesses and the workers they employ.”

Bill Herrle, Florida director for the National Federation of Independent Business, issued a statement of his own, expressing anxiety about the lingering effects of those court rulings.

“While the possibility of a rate reduction is exciting for small business owners, NFIB members are very aware that the problem of out-of-control attorneys’ fees lingers, leaving rates and small business owners in a cone of uncertainty,” Herrle said.

“Lower rates are always good news, but NFIB remains cautious about the unknown ramifications of the Castellanos decision.”

Irma confounds already straightened state budget prospects, committee learns

Florida’s tax structure will produce only $52 million in gains on existing state spending during the coming fiscal year, and will leave lawmakers more than $1 billion in the hole during each of the two budget years after that.

That doesn’t count what the state needs to spend to recover from Hurricane Irma.

The news came Thursday as the Senate Appropriations Committee began sorting through the many demands on the government’s pocketbook.

“It’s grim,” Appropriations Chairman Jack Latvala said.

“We don’t really have any extra money. We’ve had some money spent on our behalf lately that’s even making it a little tighter,” he said. “There’ll probably have to be a cut exercise, just like always.”

He referred to hurricane emergency spending ordered by Gov. Rick Scott.

Amy Baker, coordinator of the state Office of Economic and Demographic Research, reported to the committee on the budgetary picture.

“The budget they were building for next year had enough revenue for them to keep doing what they’ve been doing,” Baker said.

“But big problems in the following years, and growing,” she said. The Year 2 projection was for a $1.1 billion deficit and a $1.6 billion shortfall in Year 3.

And that didn’t account for “black swans” like Irma. Since the storm hit, Scott has used his executive authority to spend more than $141 million on hurricane response, including $25 million for emergency loans to citrus growers whose crops were wiped out.

Meanwhile, Monroe County, to name one example, likely will have to rebuild one of three hospitals in the Florida Keys. It’ll need a new or improved emergency operations center too — responders had to abandon the building because it couldn’t resist a Category 5 hurricane.

The full cost of Irma remains unclear. Visit Florida President Ken Lawson sketched out the agency’s plan to keep the tourists coming. Meanwhile, no one knows yet the full extent of the damage to state and local infrastructure, or whether the federal government will come through with emergency aid.

This, too: State pension investments are bringing in less cash. And the demands on the school system will grow, especially with the influx of new residents from Puerto Rico.

“Between what happened to the retirement system, and what they’ve already spent on Irma, you’re $140 million down,” Baker said.

“We’re going to be December before we have any confidence that we have good estimates,” she said.

“Some of these costs are certainly legitimate to be paid for from our reserves. We call it a Rainy Day Fund,” Latvala said. “And like Sen. (Joe) Negron said yesterday, if this wasn’t a rainy day, what is?”

As far as Latvala’s concerned, taxes increases are “off the table.”

As for opioids, Scott has called for $50 million to tackle the epidemic, with about half of that representing federal money.

Latvala wasn’t prepared to pass judgment on the request. “This is the very first week of committees, the very first meeting that this has been discussed. We have a lot of work to do before we make opinions like that,” he said.

He did note that he’d asked for an emergency $20 million to get opioid responders through the fiscal year.

“I’m still waiting, People are still dying. Nobody’s dying because oranges fell off of a tree. We need to treat the opioid crisis just like we’re treating the economic crisis from the hurricane, and move on it. He has the same ability on the opioid crisis, to deal with that through an executive order, as he has on the hurricane.”

Latvala did complain that Scott’s executive budget amendments circumvent the Legislative Budget Commission, a House-Senate panel empowered to authorize mid-year spending.

“I’m hopeful that we’ll be able to get back into a regular process,” he said.

“In past hurricanes we’ve had legislation that has gone into direct capital efforts like that to restore communities. I’m hopeful we’ll be able to do that this time, as well.”

 

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