Senate Still Skeptical About Scott Corporate Cash Demands
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TALLAHASSEE (NSF) – State senators still aren't buying Gov. Rick Scott's argument that Florida's business recruitment agency is running short of the cash needed to close corporate relocation deals.
Clearwater Republican Sen. Jack Latvala and members of his Appropriations Transportation, Tourism, and Economic Development Subcommittee on Tuesday continued to question the $9 million figure that Gov. Rick Scott has repeatedly said is all that remains available to Enterprise Florida for recruitment efforts in the current fiscal year, which ends June 30, 2016.
The panel grilled Bill Johnson, Scott's top business recruiter, about $141 million held in low-yield commercial escrow accounts. The money is earmarked for companies which meet promised job performance measures, many of which are years away and, in some cases, may never be reached.
"You put money in escrow for future projects, but then the future projects don't happen, and then you can't spend that money on new projects," said Nancy Detert, R-Venice. "So you've got money resting in a graveyard practically. Everybody wants more money. There is never enough. And they want their money roped off so they don't have to fight for it every year like everybody else does."
The Senate has been pushing to reform the incentive program. Senate leaders favor a system in which money would be set aside annually --- similar to the state Department of Transportation's 5-year work program --- for already-approved, contractually obligated business incentives as well as future performance payments.
Committee members also produced figures that showed another $112 million, available for the agency's recruitment "toolkit," went unspent for the past four years.
"It's hard for us to look at a number of $112 million that has gone unspent and think that we need to give more money," Sen. Jeff Clemens, D-Lake Worth, said.
Johnson and Florida Department of Economic Opportunity chief Jesse Panuccio defended the use of the escrow accounts during testimony at the Senate committee and its House counterpart on Tuesday.
States that pay cash in advance to entice businesses often have to go to court to recoup money for unmet job creation benchmarks, Panuccio said.
Johnson, who faced a similarly hostile Senate committee a month ago, later described Tuesday's meeting as "fair" and called the use of the escrow accounts more "conservative and prudent."
"The area we have a shortfall is cash," Johnson said. "Cash is king and that is the closing fund."
The agency is working to lure nearly two dozen companies to Florida and would immediately require about $47 million from the Quick Action Closing Fund if all of the businesses agreed to relocate, Johnson said.
According to Johnson, part of any incentive reforms should allow unspent incentive dollars to be rolled over to Enterprise Florida's following-year budget instead of going into the state's general revenue fund, as is currently the case.
"We need to be more in the model of Texas, where the dollars don't revert come June 30," Johnson said. "We may have worked eight months and not closed the deal and the deal is dead June 30. The business world doesn't work that way."
When asked about $765,000 in bonuses he and his staff received from the Enterprise Florida Board in August, Johnson said he is reviewing the agency's pay and compensation structure.
"When you've got a turnover of roughly 30 of the 90 staff in a year, it warrants a look," said Johnson, who received a $90,000 bonus.
Earlier this year, Scott asked lawmakers to set aside $85 million for business incentives. The final budget for the fiscal year that started July 1 included $53 million --- $43 million for incentives and $10 million for marketing --- for Enterprise Florida.
Instead of putting the money into escrow, Senate President Andy Gardiner wants the state to set aside $50 million to cover future economic incentive payments, which he noted have never topped $20 million in a single year.
Scott said last week he'd be "receptive" to any proposal that could produce a better return than the commercial escrow accounts.
The News Service of Florida's Jim Turner contributed to this report.
