Staff Reports
Gov. Rick Scott has now sicced the Department of Economic Opportunity, headed by executive director Cissy Proctor, on the Florida House to take down its critique of economic incentives.
A news release, issued late Tuesday, continues the cold war of words between the governor, an ardent supporter of incentives, and House Speaker Richard Corcoran, who has called them “corporate welfare.”
The department’s response is reprinted below, unedited and in its entirety:
Today, the Florida House of Representatives used data maintained by the Florida Department of Economic Opportunity (DEO) that was unfortunately used to inaccurately describe the result of the state’s economic incentive programs. DEO would like to take this opportunity to accurately explain the data and how the incentive programs work to create valuable Florida jobs while aggressively protecting taxpayer dollars.
DEO Director Cissy Proctor said, “Before Governor Scott came into office, state incentives were often awarded before stringent requirements were met. However, under Governor Scott, Florida companies receive economic incentives after these requirements are met, including proven job growth and wage requirements. Only contractual commitments that are met are paid. This ensures a return on investment for Florida families.”
CLAIM
64.3 percent of the economic incentives listed below were unsuccessful because:
•They only completed a portion of their requirements for which they were paid and can receive no more payments (inactive) 14.2%
•They never received any payments though a contract was executed and are ineligible for future payments (terminated) 36.9%
•The contract was never signed (vacated) 11.9%
•The application was withdrawn 1.2%
FACT
It is inaccurate to say that all inactive, terminated, vacated and withdrawn projects are not successful. While inactive projects met some performance measures, businesses were only rewarded for the jobs they created. This means the program is working. Only contractual commitments that are met are paid.
For example, if a company moves to Florida and commits to creating 100 jobs over five years but ultimately only creates 75 jobs over four years, the company only receives payments for the 75 jobs created; not for the full 100. Are those 75 jobs a failure? No. Are the 75 Floridians who found a new opportunity to provide for their family or achieve their dreams evidence of a failed project? No.
Job creation should never be viewed as a failure. This process shows the reforms that Governor Scott put in place are working to protect taxpayer dollars while encouraging job growth.
Furthermore, terminated, vacated and withdrawn projects NEVER received taxpayer funds. This shows that the Governor’s strict accountability measures are working to safeguard taxpayer dollars. This is part of the due diligence process that was reformed under Governor Scott’s leadership.
CLAIM
Less than 10% of approved incentives were completed having met all its contractual obligations with the state.
FACT
Many state incentive projects resulted in the creation of new jobs, capital investment, or higher wages in companies across the state. These job creation deals are multi-year projects with multiple different types and sizes of businesses across various industries. A multitude of factors can result in a company changing its business model, which is why Governor Scott’s reforms included strict performance-based contracts for each year of the agreements. In the years that the companies meet their contract goals, jobs are created for Florida families and investments are made in Florida communities. These new opportunities and investments are a success for the state. Again, if jobs are not created, no taxpayer dollars are spent.
CLAIM
A trend worth noting for many of the incentive programs is the common practice of either providing a one or more year extension for the various businesses receiving incentives to meet performance criteria with no award penalty, or simply amending contracts to change performance criteria.
FACT
When companies enter into agreements with the State of Florida, they are projecting performance up to a decade in advance. When initiating their projects, companies may experience delays related to local permitting, construction, renovation, federal contracts, and relocating their business. While some extensions may be provided after a thorough and strict review process, state money is not given out until full job creation, wages and capital investment from the contract are made.
CLAIM
6 out of 10 approved incentives do not result in successful projects
FACT
While inactive projects met some performance measures, they were only paid for the investments that were made. Furthermore, job creation is never a failure. Terminated, vacated and withdrawn projects NEVER received taxpayer funds.
CLAIM
3 (“Active”) of the remaining 4 that could potentially be successful could still end in a status of “Termination” or “Inactive”
FACT
All incentive projects are held accountable for the life of the project and taxpayer dollars are not spent until strict performance measures are met.
CLAIM
12% of approved incentives never execute a contract with the state
FACT
In these cases, companies seeking incentives meet with the state to discuss their business growth plans. During the due diligence process that was reformed under Gov. Scott’s leadership, the state works with the company regarding the strict requirements of the incentive program. At this point, a company may decide not to pursue an agreement. Again, in this case, no taxpayer money is ever spent. This shows that the program is working.
CLAIM
Since 1994 a total of 186 (9.6%) of approved incentives have resulted in a project that completed its contract with the state
FACT
While inactive projects met some performance measures, they were only paid for the investments that were made. Furthermore, job creation is never a failure. Terminated, vacated and withdrawn projects NEVER received taxpayer funds.
CLAIM
No statistics are currently available for the 9.6% to determine how many, if any, were sanctioned during contract performance for failure to meet their full performance requirements
FACT
All performance-based contracts have sanctions and clawbacks in the event that a company is unable to meet a requirement. This is part of the reforms of the incentive process done by Governor Scott, and the state will continue to aggressively pursue efforts to hold companies accountable in order to safeguard taxpayers’ dollars.
