Good Business

Good Business

Government Watch by Janet Leiser | Senior Editor

Business interests successfully fought two battles in the recent state legislative session: Defendants in civil lawsuits will no longer be required to pay more than their share, and government can no longer forcibly take private property for redevelopment.

"It was a great year," says Allen Douglas, state director of the National Federation of Independent Business. "Business did very good in this legislative session."

The Florida Chamber of Commerce and other business interests, including Associated Industries of Florida, have tried for years to repeal the legal doctrine called joint and several liability, which made deep-pocketed defendants responsible for an insolvent co-defendant.

This year, they succeeded.

"You only pay for what you're responsible for now," Douglas says.

The NFIB supported that change and then pushed for another one it considered as important: The elimination of government's power to take private property for economic redevelopment.

Public agencies can still take property for the construction of roads or utilities or the public good, Douglas says.

But the change was needed because of a 2005 U.S. Supreme Court ruling that legitimatized a Connecticut city's taking of land for redevelopment.

In Florida, beach cities have taken property from small business owners, he says, to give to developers for large projects that bring in more tax dollars.

The revision apparently will stop Florida eminent domain cases involving economic redevelopment not yet ruled on by a judge, Douglas says. But it probably won't help in situations where a judge has already ruled.

The NFIB, which represents 15,000 Florida business owners, is also concerned that local governmental agencies can still assess taxes on a business property on what it can be used for, not what it is used for, Douglas says.

"If you have a row of shops on the beach," he says, "and the developer takes out half and builds condos and you're next door and own the little shop that sells swimsuits and surfboards, they'll assess you like you're a 20-story condominium."

The Legislature didn't tackle that issue when the session ended May 6, but expect to hear more about it next year.

Property insurance

John Sebree, vice president of public policy for the Florida Association of Realtors, says the group hoped for major changes to property insurance laws, but they didn't materialize. However, the Legislature's $750 million bailout of Citizens Insurance Property Insurance Corp., called the insurer of last resort, is a step in the right direction.

"We'd still like to see other reforms, and we still have to figure out what they are, to be honest," Sebree says. "We have to do something to get private insurers back into our market."

Edie Ousley, spokeswoman for the Florida Home Builders Association, agrees with Sebree. "It's not the final solution," she says of the Citizens bailout. "We're all going to be paying more [premiums]. But it's certainly a start."

The bailout is intended to make Florida's property insurance market more competitive so private insurers have more incentives to write policies in the state, Sebree says, adding: "Citizens didn't write competitively, or they wouldn't have been $1.7 billion in debt."

Realtors have trouble with home closings on a daily basis because of unavailability of coverage, Sebree says. Sometimes buyers can't afford the coverage - if it's available.

"That can make or break what a family can qualify for," she says.

Part of the Citizens bailout raises the rates for those who own non-homesteaded property, Sebree says. He predicts that will adversely affect those buying a second or third home.

"Legislators say, 'We shouldn't be bailing out those people with a state fund,' " he says. "The truth is a huge number of our properties in Florida are second homes and that's a huge part of what Florida is about."

Banking

The Florida Bankers Association successfully lobbied for permission for banks to sell a broader range of products to trust customers. Previously, bankers could only provide limited mutual funds and money market investments and had to rely on third parties for other financial products.

Other bank-related successes included securing rights to insurance proceeds to make sure homeowners repair damaged property, allowing state-chartered banks to offer debt-cancellation agreements and collecting ATM surcharges from visitors who withdraw cash using foreign bank accounts.

Health care

The Florida Medical Association fought to keep non-physicians from taking over some of the tasks typically reserved for doctors. For example, the association successfully fought bills that would have allowed nurses to prescribe controlled substances and for pharmacists to administer flu shots.

But not all of the health-care legislation was positive for business. Douglas, with the NFIB, says the Legislature did nothing to ease the health insurance crisis that small businesses face.

"It's getting to the level someone is going to have to do something," Douglas says. "Small employers can't afford to provide coverage anymore. They're going to have to address this next year."

The number of employees covered by health insurance drops annually, he says. Only 69% of Florida's workers had coverage as of last fall, he says. And less than 10% of employers with fewer than 10 workers offer coverage.

One reason premiums continue to rise is because of the state-mandated requirements for health insurance, he says. Florida has 51 coverage mandates - making it second in the country behind Minnesota. For instance, insurers are required to cover mammograms and maternity care.

"Now I'm not saying there's anything wrong with covering those," Douglas says. "But it's like going to the car dealer and you have to buy a Cadillac or nothing. Small business owners can't afford to buy it."

Possible solutions might include the elimination of mandates and the pooling together of small companies as one large group to buy insurance at a reduced rate, he says.

"Something has to be done," Douglas says, "or the number of insured workers is going to continue to go down."

Political

persuasion

The Florida Chamber of Commerce says it was the best legislative session in 90 years for business. Here are some of the highlights:

INTANGIBLES TAX (HB 209) repealed, effective Jan. 1, 2007. The state now levies an annual tax on personal property such as stocks and bonds. Those who support the tax say the repeal only helps the very wealthy, says Allen Douglas, Florida director of the National Federation of Independent Business. "But that's not true," he says. "There are a lot of people who hold stocks and bonds and have for years. It penalizes those who save. You've already paid taxes on the money your earned. If you make money on the investment, you pay capital gains. Why should you be taxed again?"

CLASS ACTION reform (HB 7259) The Florida Chamber of Commerce supported the bill that limits class-action lawsuits to only Florida residents and requires proof of actual damages in some lawsuits.

ALCOHOLIC BEVERAGE surcharge (HB 7105) repealed, effective July 1, 2007. This was Florida TaxWatch's second highest tax priority, following the intangibles tax. It placed a surcharge on alcoholic drinks. The group says it's an ill-conceived tax and burdensome for state authorities and retailers.

R&D EXEMPTION (HB 415) for machinery. An economic development tool that exempts equipment used in research and development from sales tax. Also exempts machinery used in the space flight business.

MANUFACTURING EXEMPTION (HB 69) Another economic development tool that exempts machinery used to increase manufacturing output from sales tax. It's expected to help create jobs as manufacturers expand operations.

AFFORDABLE HOUSING (HB 1363) The Legislature passed a $514 million package to ease the housing crunch. It includes a $50 million project to help the state's essential workforce such as teachers, nurses and police officers. Florida TaxWatch says long-term solutions are still needed.

ECONOMIC DEVELOPMENT incentive funds (SB 2728) Enterprise Florida will receive $245 million to help bring new businesses to the state. To qualify, companies would have to invest $500 million over five years, pay workers 130% of average wages and communities would have to provide matching funds.

IMPACT FEES (SB 1194) As part of a larger growth management bill, it requires local governments to follow guidelines in setting impact fee rates. It also requires the entities to report how much is collected and how it is spent.

STATUTE OF REPOSE reduced to 10 years from 15. This is the time given to a property owner to sue a builder for latent construction or design defects. At 15 years, Florida had the longest statute of repose in the nation. The change was supported by builder associations, including the Associated Builders and Contractors and the Florida Home Builders Association.

Source: Florida TaxWatch, Florida Chamber of Commerce, Florida Home Builders Association and Associated Builders and Contractors.