The Corcoran Report: March 2011
The Upcoming Legislative Session
by Michael Corcoran

Florida's regular legislative session begins on Tuesday, March 8th. With a projected budget shortfall of $3.5 billion, the state appropriations process will be front and center throughout the 60-day session.

As is customary, Governor Rick Scott rolled out his budget recommendations at the beginning of February, before the start of the legislative session. His budget recommendations are dramatic, reducing state spending by more than $6 billion over the next two years and phasing out the corporate income tax while also lowering other taxes and fees.

Governor Scott has also recommended significant pension reforms for state employees, including new requirements that employees would contribute a portion of their salary toward their retirement as well as contributions toward their state health insurance benefits. These reforms are projected to save billions of dollars currently being spent by the state, local and municipal governments of Florida on employee benefits. Most elements of these proposals are already part of the private sector's approach to employee benefits and retirement; however, they are new to state employees and have raised concerns among state employee groups.

Governor Scott also turned down $2.4 billion in federal funding for the high-speed rail project contemplated between Orlando and Tampa. Governor Scott has concerns that the high-speed rail project will require significant state and local funding to be viable, and will require significant operating subsidies from state and local governments well into the future.

Governor Scott's approach thus far has been consistent with his campaign promises.

Now focus turns to the Legislature, as they are responsible for crafting a balanced state budget. Many in the Legislature have expressed concerns that Governor Scott's proposals are too far-reaching. It appears increasingly likely that the Legislature will start from "square one" as they craft a budget, instead of using Governor Scott's recommendations as a guide.

What remains to be seen is how much the Legislature will cut and whether the tax cuts Governor Scott has proposed will be included in the final state budget. Florida's Constitution requires passage of a state budget which is balanced. With revenue projections showing a current shortfall of $3.5 billion, the Legislature will be required to reduce spending by at least that amount.

As with any legislative session, there are a number of other significant proposals up for consideration. Overall, the Legislature is inclined to adopt additional tort reform measures, address some elements of Florida's unemployment compensation program and address concerns with property insurance regulations.

Medicaid reform will be front and center for this legislative session as well. As the one of the two largest spending categories for the state budget, along with education, Medicaid spending has grown much more rapidly than the state's revenue stream. Proposals for reform include adopting a managed-care approach for Florida's Medicaid program and significant reduction of the state's fee-for-service program. The difference in the two approaches can be best described this way: Florida Medicaid's fee-for-service program pays for care at any doctor which accepts Medicaid payment in the state. There are no limitations or measures to ensure appropriate levels of care or to measure outcomes. A managed-care approach establishes a primary care provider who is responsible for the patient's care and who is measured according to outcomes. In other states, where a managed-care solution has been adopted, health care outcomes have increased and the cost of the program has become more manageable.

With doctors, insurers, hospitals, provider organizations and the state's Medicaid population impacted by any changes to the current system, the issue of Medicaid reform promises to be widely debated throughout the session. One thing appears certain: Florida's Legislature does intend to make changes to the system this year in order to control cost in the next budget year as well as in future years.

Another hot topic this session will be government reorganization and reductions in regulations. Governor Scott campaigned on promises to reduce unnecessary and duplicative regulations that have stifled growth and increased the time required for businesses to receive permits and other approvals from state and local governments. Florida's Legislature appears to be in close agreement with Governor Scott on this subject and the House has even established a select committee to review and make recommendations on reorganization. Additionally, many bills have already surfaced which repeal certain regulations and which propose consolidation, merger or elimination of certain state agencies.

The reasoning behind this effort is twofold. First, there is a belief among the Legislature and Governor that unnecessary and duplicative regulations are preventing businesses from opening and projects from moving forward. Second, the Legislature and Governor believe that fewer agencies and staff will be able to accomplish the same amount as the current number of agencies and staff. As in any business, when times are lean, fewer employees are expected to carry more of the load. This approach is being reflected in a number of proposals on the table for the coming session.

This session holds the possibility of more significant change than in previous sessions. In many ways, the perspective of Tallahassee has changed to a much more business-oriented approach than in past years. What remains to be seen is whether the Legislature and the Governor will be successful in adopting these changes, in light of significant opposition from a number of constituency groups throughout Florida.

We appreciate the opportunity to serve you and the executive staff of Community Papers of Florida and the Florida Community Papers Advertising Network. We are always available to answer any questions you may have about proposed legislation or issues. We continue to appreciate the confidence you have placed in us to promote and advocate your interests in Tallahassee.


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