Reform bill targets Enterprise Florida, but will accountability persuade critics?

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Posted: Jan 04, 2017 4:37 PM
Reform bill targets Enterprise Florida, but will accountability persuade critics?

Gov. Rick Scott wants to fund it. House Speaker Richard Corcoran wants to abolish it. But a new bill filed over the holiday break would split the difference, keeping Enterprise Florida Inc. alive while subjecting it to greater levels of accountability.

Executive Office of the Governor

IN CHARGE: Gov. Rick Scott is chairman of Enterprise Florida, the state’s public-private economic development organization. A new bill would require more accountability.

The beleaguered state economic development organization uses taxpayer-funded incentives such as tax credits, refunds and grants to entice businesses to relocate or expand operations to the Sunshine State.

Corcoran opposes giving public money to private businesses as a matter of principle, and cites failed incentive deals as unacceptable taxpayer losses. Scott, the Florida Chamber of Commerce and other proponents say the incentives create jobs and spur economic growth.

Enterprise Florida’s mixed track record of success notwithstanding, state Sen. Jose Javier Rodriguez, a Miami Democrat, is proposing legislation to address some of the organization’s more glaring structural concerns.

Foremost, the quasi-state agency uses a combination of state and private-sector money to fund its business incentives, although the funding balance has been overwhelmingly on the side of the taxpayer.

According to the Office of Program and Policy Analysis and Government Accountability, a legislative research office, private-sector contributions were expected to reach 50 percent of the organization’s incentive budget by fiscal year 2000-01, a decade after its creation.

But private funding hovers around 15 percent, leaving taxpayers to pick up the rest.

Rodriguez’s bill aims to change that. The legislation would spread the risk more evenly by requiring a 1-to-1 match of public and private operational funding every year.

If Enterprise Florida fails to acquire the appropriate amount of private support, the bill calls for reducing annual state appropriations by 50 percent, or cutting public funding to an amount equal to private contributions, whichever is larger.

Sen. Jose Javier Rodriguez, D-Miami

PITCH IN: Sen. Jose Javier Rodriguez, D-Miami, wants the private sector to pay more of the cost of Enterprise Florida.

Additionally, finalizing an incentive contract would require the approval of two-thirds of the board of directors, with members legally required to abstain from voting if they have any material affiliation to a recipient organization or one of its subsidiaries.

An independent third party also would be newly required to verify whether businesses that receive development incentives actually meet performance requirements embedded in the incentive agreements.

Currently, the Department of Economic Opportunity, the same Scott administration agency that oversees Enterprise Florida, conducts incentive award audits. Rodriguez’s bill would require DEO to publish the results of an independent audit on its website within 48 hours.

Rodriguez’s Senate bill has no House companion at this time.

‘Retain their competitive edge’

Incentive plans and state negotiations with businesses are routinely kept secret, and are exempt from public records for up to a year after a business or individual first seeks state funding.

Agreements also are confidential for six months after a final project order is executed, thereby obstructing the public’s right to know how its tax dollars are spent until the benefits are signed, sealed and delivered.

In a report called “Enterprise Florida: Economic Development or Corporate Welfare,” Integrity Florida, a nonprofit government watchdog, asked “How can Floridians provide proper oversight to these deals if the companies’ names and deals aren’t publicly available?”

Rodriguez’s bill wouldn’t alter the current confidentiality framework — unless officials publicly disclose information relating to a new incentive agreement, for example, at a press conference or via a press release, a familiar habit of Gov. Rick Scott.

At that time, all relevant award details would become public record.

EFI says confidentiality is necessary to protect trade secrets, commercial and financial proprietary information, and project proposals — essential elements to keeping the state’s program competitive.

“Florida is competing not only with every other state for economic development, but also other countries as well, which is why it is important help potential employers retain their competitive edge during negotiations,” its website says.

‘Quantifiable, measurable and verifiable’

Finally, the proposed legislation would clamp down on employee bonuses.

Last year, 72 of the agency’s 90 employees received bonuses, according to an investigative report by the Naples Daily News. Enterprise Florida’s payroll also increased by $1.2 million over the past six years.

Bonuses would no longer be based on projected, or “unconfirmed,” results for businesses receiving taxpayer support. Instead, those metrics would have to be “quantifiable, measurable and verifiable.”

Enterprise Florida came under increasing scrutiny from lawmakers and the news media after Corcoran, then a state representative, led an effort to deny a $250 million taxpayer-funded incentive appropriation last year. The funding was a core agenda item for Scott, who is tempering his 2017 incentive funding request to $85 million.

“We know that Enterprise Florida needs to be reformed to get back to its core mission of job creation,” Scott admitted. “During the upcoming legislative session, I will be proposing legislation to restructure Enterprise Florida.”

The question is whether Scott’s or Rodriguez’s proposed reforms will be enough to persuade Corcoran, who couldn’t be more clear about his position.

“The government engaging in social engineering to pick winners and losers that benefit the 1 percent is a bad deal for Florida’s taxpayers. There will not be any corporate welfare in the House budget,” Corcoran said on the heels of Scott’s latest funding request.

A list of companies that receive incentives is published in Florida’s Annual Incentive Reports, which is posted on the Enterprise Florida website.

All non-confidential incentive information and redacted contracts are posted on the Department of Economic Opportunity’s Incentive Portal.