Senate Unveils Jobs for Florida Package

Feb 3, 2010

Below is a breakdown of the Florida Senate’s Jobs for Florida package unveiled this morning in the Select Committee on Florida’s Economy.  This plan is designed to help allow businesses to put Floridians back to work and comes in response to last month’s Jobs Summit, where legislators listened to those who create jobs in our state.  Please feel free to contact me at .(JavaScript must be enabled to view this email address) with any questions.

JOBS FOR FLORIDA

Section 1: Transparency in the use of Public Funds in Economic Development
• Requires counties to include in their contracts with private Economic Development Organizations (EDO) and Economic Development Agencies (EDA) to report annually how they spend the public funds and the outcomes from their efforts. This report would be included as an addendum to the local government’s annual financial audits.
• Requires counties to annually report to the Legislative Committee on Intergovernmental Relations (LCIR) the local economic development incentives granted during the previous fiscal year. If available, the local government would also submit any evaluations of the outcomes of their investments. The LCIR would then compile an annual report of the information submitted by the local governments.
• Fiscal Impact:  Indeterminate, but likely minimal.

Section 2:  Corrects a cross-reference.

Section 3: Transparency in the use of Public Funds in Economic Development
• Same concept as Section 1, but applicable to municipalities with annual revenues or expenditures greater than $250,000.
• Fiscal Impact:  Indeterminate, but likely minimal

Section 4: Improved Competitiveness for Florida Aviation and Marine Industry
• Creates an $18,000 cap on the amount of sales and use tax that may be collected from each sale of an aircraft or boat in Florida.
• Fiscal Impact:  In 2009, the Revenue Estimating Conference (REC) estimated total impact on state and local government revenues to be a loss of ($12m) in 2010/11, a ($12.6m) in 2011/12, and a ($13.2m) in 2012/13.  The REC also noted in its analysis that “While it is expected that the reduced tax will lead to increased taxable purchases of aircraft and boats in Florida, that effect cannot be quantified.” 

Section 5: Expansion of Tax Incentive for Machinery, Manufacturing and Spaceports
• Expands, for two years, the current sales tax exemption for machinery and equipment by exempting existing manufacturing and spaceport businesses from having to show a minimum 10% increase in their productive output.
• Fiscal Impact:  According to REC’s analysis in 4/09 of a similar legislative proposal, the state fiscal impact was at ($111.2m) in FY 09/10; ($123.3m) in FY 10/11; and ($10.3m) in FY 11/12. Benefits are indeterminate.
• Narrows the sales tax exemption for building materials used in enterprise zones, to:
o Eliminate the eligibility of condominium units (“parcels”) and condominium properties.
o Delete “construction” from the definition of “rehabilitation of real property,” thereby only allowing the exemption for the “reconstruction, renovation, restoration, rehabilitation or expansion of improvements to real property.”
o Clarify that to qualify for the exemption, the rehabilitation must have commenced when the project was located in the zone. (This prevents projects from benefiting from zone boundary changes intended to include projects under construction.)
o Fiscal Impact:  According to DOR, in FY 08-09, $28.9 million of the $30.9 million in sales-tax refunds for building materials purchased for use within an EZ were for condo projects.  Through the first six months of FY 09-10,  about $37.2 million of the total $38.6 million in sales-tax refunds for building materials within enterprise zones is for condo projects.
• Creates a transferable sales and use tax credit for qualified entertainment productions, which can’t be claimed before any tax period beginning before July 1, 2011.
• Fiscal Impact:  Indeterminate. Total credits for the program are $75 million a year for three years, with credits claimed against tax liability after July 1, 2011.

Section 6:  
• Reinstates the current law in s. 212.08(5)(b), F.S., effective 7/1/12, relating to the sales tax exemption for machinery and equipment, to require that all existing manufacturing and spaceport businesses which are expanding their operations/facilities show a minimum 10% increase in their productive output in order to be eligible for the exemption.
• Fiscal Impact:  Indeterminate, but likely positive, as expanding manufacturers will again be paying SUT again on MM&E if they didn’t meet the productivity threshold.

Section 7: 
• Gives OTTED and the Office of Film and Entertainment access to DOR confidential information about the entertainment industry tax credits.
• Fiscal Impact:  None.

Section 8:
• Updates the order in which certain tax credits can be applied against tax liabilities.
• Fiscal Impact:  None.

Section 9: Incentives for Businesses to Hire Unemployed Floridians
• Creates annual $1,000-per-job corporate income tax credit for businesses that hire a person who has been unemployed for at least 26 weeks.
• The new hire must be able to document that AWI has made a determination that he/she was eligible to receive unemployment compensation.
• Total tax credits capped at $5 million annually.
• Businesses may carry over tax credits.
• The credit is available for two years for each individual employee. 
• Fiscal Impact:  Indeterminate.

Section 10: 
• Recognizes the creation of the entertainment industry incentive as a CIT credit, which can be transferred, and which cannot be claimed against tax liability until after July 1, 2011.
• Fiscal Impact:  Indeterminate. Total credits for the program are $75 million a year for three years, with credits claimed against tax liability after July 1, 2011.

Section 11: Expands Capital Investment Tax Credit that Produces High Paying Jobs
• Expands eligibility and decreases the qualifications for the Capital Investment Tax Credit (CITC), which grants tax credits to businesses for new capital investments in their business.
• Combines two categories of CITC projects, and adopts most of the eligibility requirements for the lower-threshold option;
• Allows all “qualified target industry” businesses to apply for the incentive;
• Reduces the job creation requirement from 100 to 50;
• Reduces the minimum capital investment requirement from $100 million to $25 million;
• Retains the required annual average wage at 130% of the private sector annual area wage;
• Increases the annual tax credit from the current 5% per year over 20 years to 15% in each of the first 3 years, 10% in each of the next 4 years, and 5% in each of the last 3 years.
• Allows OTTED to prorate an eligible business’ tax credits if the job-creation requirement is not met, but the wage and capital investment requirements are satisfied.
• Fiscal Impact:  Costs and benefits are indeterminate. FYI, the value of the CITC refunds in FY 08-09 was $5.2 million, according to the Florida Tax Handbook.

Section 12: Expands QTI and QDSC Job Creation Programs
• Increases the annual appropriations cap for the QTI & QDSC programs from $35 million to $100 million. 
• Fiscal Impact: The actual appropriation will continue to be established by the annual budget passed by the Legislature.

Section 13: Expansion of the Qualified Target industry (QTI) Tax Refund Program
• Expands the per-job refund through the QTI program with four bonus options for specified businesses that satisfy specified requirements.  (Businesses are limited to one bonus option per job created.)
• Creates a $2,000-per-job bonus for businesses that are either: corporate HQs for businesses currently not represented in Florida; renewable energy businesses; transportation equipment manufacturers; life sciences; financial services, or are information technology businesses.
• Creates a $2,000-per-job bonus for exporters that increase by 10%  either the value or tonnage of exports handled by Florida seaports in each of the years that they receive a QTI tax credit. 
• Creates bonuses of $1,000 per job for QTI businesses in the following situations:
o For projects where the local government equally matches the state’s award, rather than the current 80% state-20% local split.
o For businesses that hire any Florida resident who has been unemployed for at least 6 months.  Allows recipients, if applicable, to also receive the CIT jobs credit created in Section 10.
• Restores the QTI program’s original intent language, and includes an additional provision:  “The Legislature finds that higher-wage jobs reduce the state’s share of hidden costs such as public assistance and subsidized health care associated with low-wage jobs.”
• Reorganizes the existing definitions in alphabetical order.
• Makes three substantive changes to the definitions:
• Creates a definition for “return on investment.” Directs OTTED to consider the project’s ROI when evaluating the applications.
• Deletes local ad valorem taxes as eligible for QTI refunds.
• Directs QTI applicants include in their document submittal to OTTED an estimate of what percentage of machinery, equipment, and other resources it expects to make in Florida.
• Relaxes documentation requirements by allowing any QTI business to submit only once to OTTED its tax payment documentation, if that one-time payment equals or exceeds what it expects to receive in incentives.
• Renames the “economic stimulus exemption” to “ economic recovery extension.” Extends the current window for QTI businesses to participate in the program another 12 months, to June 30, 2012.
• Directs OTTED to begin evaluating QTI recipients post-award, and to report back to the Governor and Legislature on its initial findings by 12/1/11.
• Deletes several obsolete provisions, including a provision related to refunds for supplemental communications services taxes and a provision extending the local-match waiver for 17 counties affected by the various storms of 2004.
• Specifies that no business that receives a QTI award also may receive CITC. (However, a QTI business that receives the “jobs for the unemployed” bonus also can claim the same CIT credit.
• Sunsets the QTI program 6/30/15.
• Fiscal Impact: Indeterminate.

Section 14: Corrects cross-references. 

Sections 15: 
• Adds “digital media products” to the definition of “entertainment industry.”
• Fiscal Impact:  None.

Section 16:
• Requires the Office of Film and Entertainment to update the state’s entertainment industry master plan every 5 years.
• Removes or replaces obsolete references.
• Fiscal impact:  Indeterminate.

Section 17:
• Removes or replaces obsolete references in statute related to the Florida Film and Entertainment Advisory Council.
• Fiscal Impact:  None.

Section 18: 
• Deletes (obsolete) provisions allowing the Office of Film and Entertainment to reimburse non-state employees (“third parties”) for travel and entertainment expenses.
• Deletes provisions allowing the Office of Film and Entertainment to reimburse staff for meals and other items provided to other persons.
• Redrafts for clarity.
• Fiscal Impact:  Indeterminate, but likely minimal.

Section 19: Florida’s Entertainment Incentive Program.
• Transforms the incentive from a cash refund dependent on annual legislative appropriations to a transferable tax credit program.
• Tax credits of $75 million a year against CIT and SUT would be available for qualified productions, based on a percentage of their qualified expenditures.
• Tax credits can be claimed against tax liability until after July 1, 2011.
• Current production “queues” are somewhat reorganized:
o A “general production queue” that includes movies, television series, and most other types of entertainment productions except commercials, music videos, and an independent Florida films, would have 94% of the tax credits allocated to it.
o A “commercial and music video queue” would have 3% of the tax credits allocated to it.
o The “independent production queue” would have 3% of the tax credits allocation to it. 
• The Office of Film and Entertainment would continue to qualify productions as eligible, and also review expenditure documentation from the productions before the tax credits were released.
• Credits may be transferred and carried forward.
• The Office of Film and Entertainment will continue to publish an annual report on the incentive program.
• Fiscal impact:  Indeterminate.

Section 20: 
• The Office of Film and Entertainment’s required annual report on the amount of sales-tax exemptions to entertainment productions to now include ROI calculations for companies that receive the cash incentive and sales tax exemptions.  No Fiscal Impact.

Section 21: Commercialization of Florida-Based Research
• Creates the Florida Research Commercialization Matching Grant Program.
• Functionally identical to 2008 and 2009 legislation.
• Grant program assists small or startup companies that take advantage of federal and state partnerships to accelerate their growth and market penetration. Program applicants must meet several criteria, such as having attracted funding from non-government sources.
• EFI’s Technology, Entrepreneurship and Capital Committee, or a subcommittee, is directed to develop program policy, establish criteria for the grant awards, approve the awards, and review the program’s progress and results.
• Eligible businesses must be registered with the Fla. Department of State, have their primary office in Florida as well as the majority of its employees, and conduct its principal research in Florida.
• It also must have already received a Phase 1 federal research grant and meet several other requirements.
• Fiscal Impact:  Costs and Benefits Indeterminate. As for costs, state investment need not be large in order to assist small, young businesses draw down more federal SBIR funds. Benefits may be significant, long-term.

Section 22:  Corrects a cross-reference. 
Section 23: Delegation of DEP Authority to Local Governments
• Amends s. 373.441, F.S., to:
• Provide for a local government to petition the Governor and Cabinet for the review of a request for a delegation of authority which DEP has not acted on within 1 year of the local government’s submission.
• Requires DEP to provide specific detail of why it denied a local government’s request for a delegation of authority must provide specific detail of those statutory or rule provisions that were not satisfied. A local government, upon being denied a request for a delegation of authority, may petition the Governor and Cabinet for a review, and the Governor and Cabinet may reverse DEP’s decision.
• A county having a population of more than 75,000 or a municipality serving populations of more than 50,000 must apply for delegation of authority on or before June 1, 2011.  A county, municipality, or local pollution control programs that fails to apply for delegation of authority may not require permits that in part or in full are substantially similar to the requirements needed to obtain an environmental resource permit.
• Fiscal Impact:  Indeterminate.

Section 24: Study of Florida Enterprise Zone Program
• Directs OPPAGA to evaluate certain aspects of the Florida Enterprise Zone Program (ss. 290.001-290.014, F.S.) and submit a report to the Legislature by 1/15/11.  Some of the points to be examined by OPPAGA are:
• Changes to the program over the years;
• The direct and indirect costs of the program; and
• Whether the incentives offered are appropriately targeted.
• Fiscal Impact:  Insignificant, because will be part of OPPAGA’s general work plan.

Section 25: Flexibility in Use of Space Transportation Infrastructure
• Expands the authorized uses of the FY 08-09 appropriation of $14.5 million for space transportation infrastructure improvements at Launch Complex 36, to allow the funds to also be used for improvement to other facilities, as long as these projects result in quantifiable and verifiable job retention and job creation.
• Fiscal Impact:  No immediate cost to the state, and could generate significant positive benefits to the State Treasury longer term.

Section 26: Inventory of State Owned Lands
• Directs the Board of Trustees of the Internal Improvement TF (the Governor and Cabinet) to direct all state agencies that manage state-owned land to review their inventories for real property, even conservation lands, that could surplused and sold.
• Specifies what the agencies’ reports should include, and directs agencies who fail to identify at least 10% of their state property inventory to detail why.
• The BOTIIT will consult with LBC in reviewing the reports, and then turn the task over to DMS to determine how marketable these properties are.
• DMS report due 2/1/11.
• Notwithstanding any law to the contrary, the proceeds of the sale of these properties is to be deposited in a new revolving loan fund for small businesses.
• Fiscal Impact:  On its face, indeterminate but likely minimal since all state agencies are supposed to compile inventories and have surplus processes. Longer term, could provide revenues to the State Treasury from sale/lease of public facilities, plus reduce agencies’ management costs.

Section 27: 
• Directs OPPAGA to evaluate the Commercialization Grant Program prior to the 2013 Regular Session.
• Fiscal Impact:  None, because it will be part of OPPAGA’s work plan.

Section 28: 
• Further extends the permit extensions granted in SB 360/ch. 2009-96, L.O.F., for another 3 years. 
• Fiscal Impact:  Costs and benefits indeterminate.

Section 29:
• Extends the current extension of the First-Time Homebuyers program administered by the Florida Housing Finance Agency by an additional year.

Section 30: Access to Credit – the Jobs for Florida Revolving Loan Program
• Reveals the Legislature’s intent to create a “Jobs for Florida Revolving Loan Program.”
• Directs the State Board of Administration to evaluate certain aspects of the proposed program.
• The general concept is a matching, low-interest, revolving loan fund for Florida-domiciled small businesses, defined as having fewer than 50 full-time employees.
• Loan applicants must meet federal Small Business Administration 504 loan
requirements for credit-worthiness and collateral.

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