Jim Rosica
Florida Senate President Andy Gardiner on Monday defended his chamber’s position on funding the state’s business incentives, three months after Florida’s economic development czar complained lawmakers were starving him of money.
“(W)e need to change how we fund economic development,” Gardner said in a memo to senators.
“A business would not set aside the total funds needed for a long-term investment years before the first payment is needed,” he said. “Instead a business budgets to ensure that funding is available when needed, similar to the way we currently budget for all the other programs in the toolkit.”
In June, Bill Johnson – Florida Secretary of Commerce and President & CEO of Enterprise Florida – said during a conference call that the state’s incentive fund will run dry on Jan. 1. Enterprise Florida is the state’s public-private economic development organization.
Johnson had asked for $85 million in incentive funding, saying he needed every dollar: “There’s no need for (Enterprise Florida) to exist if we cannot garner the support of our Florida Legislature.”
Most important to state efforts is the “quick action closing fund,” or QAC, a pot of cash Gov. Rick Scott can draw up to $2 million from without legislative approval.
Gardiner said he didn’t see the value of tying up money to sit unused.
The Legislature’s proposal “would have discontinued the practice of appropriating funds in excess of the amount needed … free(ing) up millions of tax dollars that could be used to grow Florida’s economy today,” he said.
From the memo:
The amount requested for QAC projects is an estimate of the total amount of funds needed for deals that EFI and DEO (Department of Economic Opportunity) might make over the next year, known as the pipeline. This method naturally restricts the number of contracts that can be made to incentivize companies to come to Florida or to stay and expand in the state. The pipeline is a very fluid process – businesses sometimes operate on different fiscal years and often need time to thoroughly evaluate Florida’s offer. By ‘fully funding the pipeline,’ funds may be obligated for long-term projects, but are not needed to make payments to businesses in the year the contract is executed.
…. The Legislature’s proposal created an annual statutory cap of $50 million for the maximum potential payments in any fiscal year for all economic development incentive contracts, including QAC projects. Since Fiscal Year 2011-2012, DEO has not made more than $19 million in incentive payments to businesses in any single year. The proposed statutory cap of $50 million would more than double the amount of annual payments currently being made to businesses. By setting a $50 million cap on annual payments, EFI would be provided greater flexibility to aggressively pursue more businesses, rather than being constrained by a line item in the budget.
Lawmakers return to the Capitol later this week for the first round of committee meetings leading up to the 2016 Regular Session, beginning in January.
