This year, the Legislature passed a $70.4 billion budget for fiscal year 2010-2011. It contains nearly
$4 billion in increased spending: $2.6 billion from existing federal stimulus dollars plus $880 million if Congress approves of a six-month extension of stimulus spending for Medicaid. The bulk of the additional Medicaid funds – $730 million – would be put into state reserves, and the rest would be spent on projects in various parts of the budget including health care, college scholarships, transportation and economic development.
As Florida climbs out of the recession, legislators understand that economic development and job creation will play an important role in growing the state’s economy. They demonstrated their understanding by the large number of economic development bills filed, including recommendations related to tax incentives, sales tax exemptions, grants to small-and medium-sized businesses, and changes to current programs.
During the session, Enterprise Florida staff worked tirelessly to ensure that the House and Senate understood the benefits to the state if the Legislature enacted the 10 proposals the EFI board cited as economic development priorities. The staff’s diligence resulted in huge dividends: Nine of the 10 proposals passed including:
§ funding for Enterprise Florida operations, Quick Action Closing Fund and the Defense Infrastructure Grant program
§ reauthorization of the Qualified Target Industry Tax Refund program
§ creation of the Research Commercialization Matching Grant program.
We thank our statewide partnership of economic development organizations for supporting Enterprise Florida’s legislative priorities. Their efforts were instrumental to this success story. Also to be acknowledged are bill sponsors, legislative champions, the governor, and the OTTED (Office of Tourism, Trade and Economic Development) because their guidance and support helped us overcome some of the biggest hurdles.
Attached is a summary of each item on Enterprise Florida’s 2010 legislative agenda and its outcome. You’ll also find information on other successful economic development bills that will enhance the state’s business climate and job creation efforts.
If you have questions or need additional information, please contact me at (407) 956-5602 or alatimer@eflorida.com.
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Enterprise Florida Legislative Agenda Items
Incentive Modifications
Three of the four sets of modifications that Enterprise Florida proposed the legislature make to existing incentive programs were adopted. Suggested changes to the Qualified Target Industry Tax Refund (QTI) and High Impact Performance Incentive (HIPI) programs were adopted, as was the suggestion to revise the criteria required for manufacturers to qualify for a sales tax exemption on their purchases of machinery and equipment. The proposed modifications to the Capital Investment Tax Credit (CITC) program were not adopted.
As the economy changes and other states revamp and strengthen their incentive programs, Florida must also retool its incentive programs if it is to remain a serious contender for job creation projects. It was in pursuit of that goal that Enterprise Florida’s Competitiveness Working Group recommended modifications to several incentive programs.
Bill Information: The modifications to QTI, HIPI and sales tax exemption for manufacturers passed the legislature as part of Senate Bill 1752.
Status: Signed into law by the Governor on May 28, 2010.
QTI Modifications
§ Rural cities are now eligible for a local financial support waiver.
§ Renewable energy industry businesses have been granted an exception to the “Market and Resource Independent” criteria used to determine whether a company qualifies as a target industry business. They must still meet the other five requirements necessary for designation.
§ Businesses under NAICS code 5611 (Office Administrative Services) or 5614 (Business Support Services, including call centers) can only be considered a target industry business if the community it plans to locate in has conditions that are negatively impacting its economic growth, e.g. low per capita income, high unemployment, high underemployment, or a lack of year-round stable employment opportunities. Additionally, an assessment indicating that the locating business will improve these conditions is required.
§ The Office of Tourism, Trade and Economic Development is required to update the list of target industries every three years.
§ Economic Stimulus Exemption (ESE) renamed Economic Recovery Extension (ERE) and extended for an additional year through June 30, 2012.
§ Businesses submitting documentation to support sufficient taxes paid to cover the duration of the QTI award do not have to re-submit documentation annually. Claims must still be filed to verify job and wage performance.
§ Additional $1,000 per job bonus available for projects where the local financial support equals the base QTI award.
§ Additional $2,000 per job bonus available for projects within designated high impact sectors OR if a business increases exports of its goods through a seaport or airport in Florida by at least 10% in value or tonnage in each of the years that the business receives a refund.
§ Businesses must provide an estimate of the proportion of the cost of machinery and equipment and other resources necessary in the development of its product or services to be used in the Florida operations which will be purchased outside this state.
§ The governing board of the county where the QTI business will locate must notify OTTED and EFI which wage (state, county or MSA) must be used as the basis for the business’ wage commitment.
§ A wage waiver is available for manufacturing projects if the jobs pay an average wage of at least 100% of the average private sector wage in the area where the business is to be located.
HIPI Modifications
§ Businesses now have two new categories under which they can qualify for a High Impact Performance Incentive award.
- The first category is businesses that will make a cumulative investment of $50 million and create 50 jobs.
- The second category is businesses that are engaged in research and development that will make a cumulative investment of $25 million and create 25 jobs.
§ The list of high impact sector designations must now be reviewed every three years.
Sales Tax Exemption for Manufacturers
§ Beginning July 1, 2010, a manufacturing business will be eligible to receive an exemption of sales tax on purchases of machinery and equipment if they achieve a 10 percent increase in productivity in a single product line. Additionally, manufacturers now have the flexibility to select which continuous 12-month period out of a 24-month span of time it will use to demonstrate the 10 percent productivity increase required to qualify for the exemption.
§ Previously, in order receive the exemption a manufacturer had to prove that it had increased its productive output by 10 percent or more for an entire plant or operation in a continuous
12-month period.
Qualified Target Industry Tax Refund Program (QTI)
In addition to the modifications outlined above, the QTI program was reauthorized for an additional 10 years. It was due to sunset in 2010 if action had not been taken to extend it. Enterprise Florida encouraged the legislature to reauthorize the program for an additional ten years and support modifications that would make this state workhorse program more competitive.
The QTI program is the state’s most widely used incentive program and helps to diversify Florida’s economy by enabling the Florida to effectively compete for higher-wage jobs.
Bill Information: House Bill 7109 passed the House and the Senate.
Status: Signed into law by the Governor on May 27, 2010.
Research Commercialization Matching Grant Program
After two unsuccessful attempts to get this program established, the 2010 Legislature approved creation of a Florida Research Commercialization Matching Grant program. The program was inaugurated with a $3 million budget appropriation.
The Florida Research Commercialization Matching Grant program is designed to give a funding match to Florida firms that have received a Phase I or Phase II award from the federal Small Business Innovation Research (SBIR) program and/or the Small Business Technology Transfer (STTR) program. This matching grant program will contribute to strengthening Florida’s foundation for the growth of innovative companies. It will be administered by the Florida Institute for the Commercialization of Public Research.
Bill Information: Program created and funded within Senate Bill 1752.
Status: Signed into law by the Governor on May, 2010.
Quick Response Training Program (QRT)
The amount appropriated for the Quick Response Training (QRT) program for FY 2010-11 is
$3.3 million.
The QRT program is administered by Workforce Florida. It provides funds to support the customized employee training needs of eligible companies.
Status: Funding for the QRT program was included in the General Appropriations Budget that was approved on May 28, 2010.
Regional Rural Development Grant Program
The Regional Rural Grant program has been expanded to allow regional rural organizations to provide technical assistance to local entrepreneurs.
Florida’s rural areas often find themselves at a financial disadvantage when attempting to participate in technical assistance programs, such as the Economic Gardening program. This contributes to the growing economic gap between rural and non-rural Florida.
Bill Information: Language expanding this program is included in Senate Bill 1752.
Status: Signed into law by the Governor on May 28, 2010.
Research and Development (R&D) Corporate Tax Credit
Enterprise Florida was unsuccessful this year in getting the legislature to set up a program to provide tax credits to companies that spend heavily on corporate research and development. In this tight budget year, it was apparent early on that the program did not have the broad-based legislative support it needed to pass.
A research and development tax credit program has proven successful in supporting the growth of innovative companies in the U.S.; 37 states have implemented similar programs. For two years, Enterprise Florida has urged the Legislature to establish a program in Florida as a way to further deepen our roots into the innovation economy.
Bill Information: The House legislation (HB607) was heard in only one of its referenced committees and the Senate bill (SB1184) failed to be placed on an agenda for a single committee hearing.
Status: Not adopted.
Cost Benefit Analysis of Legislation
The President of the Senate and the Speaker of the House now have the ability to request a more detailed economic impact analysis of planned state expenditures. The cost benefit analysis more thoroughly shows the return on investment and the potential economic growth associated with the proposed legislation. The passage of this bill is a signal that the legislature is aware of the need to analyze the true potential impact of economic development initiatives in the state of Florida.
Currently, the legislature uses a static analysis that focuses purely on cost. A new model was clearly needed that would demonstrate the total value associated with economic development funding and policy decisions.
Bill Information: House Bill 121, by Representatives Crisafulli, Hudson and Poppell, and SB 1178, by Senator Mike Haridopolos, proposed varying ideas for legislative use of a dynamic versus static scoring model. Senate Bill 1178 passed the full House and Senate.
Status: Signed into law by the Governor on May 26, 2010.
Enterprise Florida and Economic Development Toolkit
Below is a breakdown of the FY2010-11 appropriations for Enterprise Florida and the economic development toolkit.
Strengthening Florida’s economy was one of the goals of the Governor and legislature this session. When Sine Die occurred, the policies, programs and appropriations supporting job creation and economic growth indicated that goal had been accomplished. Faced with a broad range of important needs and a $2+ billion shortfall in state revenues, the legislature chose to use federal stimulus money to fill some funding gaps and increase appropriations for other state programs, including education and environmental and economic development initiatives. Enterprise Florida will maximize the resources the state has provided to continue its efforts to diversify Florida’s economy and spur job growth.
Status: Funding for Enterprise Florida operations and the Economic Development Toolkit were included in the General Appropriations Budget that was approved on May 28, 2010.
| Program | FY 2008-2009 Appropriation | FY 2009-2010 Appropriation | FY 2010-2011 Appropriation | FY 2010-2011 FMAP* Appropriation |
| EFI Operations | $11,900,000 | $11,400,000 | $11,100,000 | |
| QTI/QDC/HIPI | $21,637,500 | $21,637,500 | $16,567,473 | |
| Quick Action Closing Fund | $41,460,000 | $13,460,830 | $1,000,000 | $15,000,000 |
| Brownfield Redevelopment | $1,685,400 | $1,685,400 | $2,480,000 | |
| Road Fund | $20,000,000 | $20,000,000 | $20,000,000 | |
| Quick Response Training | $5,000,000 | $3,300,000 | $3,300,000 | |
| Defense Infrastructure Grant | $1,500,000 | $500,000 | $3,000,000 | $2,000,000 |
| Defense Reinvestment Grant | $750,000 | $850,000 | $850,000 | |
| Military Base Protection | $250,000 | $150,000 | $150,000 | |
| Rural Infrastructure Fund | $4,700,000 | $1,150,000 | $1,100,000 | |
| Rural Community Development Grant | $1,300,000 | $1,300,000 | $1,300,000 | |
| Total | $110,182,900 | $76,183,730 | $57,847,473 | $17,000,000 |
*FMAP = Federal Medicare Assistance Program dollars, contingent on Federal Appropriation
Funding for Enterprise Florida ($11,100,000)
Enterprise Florida’s budget supports its mission to diversify Florida’s economy. In FY2008-09, the budget enabled the recruitment and retention of 20,900 jobs at an average wage 32 percent higher than the state’s average and reflecting Florida’s focus on high-skill sectors. Furthermore, the job creation and retention projects closed this past year are expected to generate a combined $1.1 billion in capital investment. And, for the eleventh consecutive year, Enterprise Florida has produced a significant return on Florida’s investment, generating $4.96 for every dollar invested in its operations and economic development incentives.
Despite a very tight budget year, the Enterprise Florida operating budget received only a minor reduction of $300,000 from last fiscal year, once again reflecting the Governor and Legislature’s belief that investing in economic development is part of a successful strategy for reinvigorating the state’s economy.
Quick Action Closing Fund ($16,000,000)
($1,000,000 nonrecurring General revenue and $15,000,000 nonrecurring General revenue contingent on FMAP dollars)
If the Federal Medical Assistance Program funding comes through, Florida will have $16 million in its “deal closing” fund to compete against other states for prospective business opportunities. The Quick Action Closing Fund is a tool that can be accessed when the state is vying for a significant job creation project where it is at a competitive disadvantage. It is used only when absolutely necessary and gives the state a clear competitive edge in many cases. In 2009, the Quick Action Closing Fund played a vital role in the creation and retention of 8,080 jobs paying an average wage of $48,488.
Economic Development Transportation Fund (“Road Fund”) ($20,000,000)
Funded at $20 million, the same amount as last fiscal year, the “Road Fund” will be available to support many good job creation projects in FY2010-11. When a transportation impediment is keeping a company from locating to or expanding within Florida, the Road Fund is often the solution that gives Florida the upper hand in the competition to win the project. In FY2008-09 there were eight approved road fund projects, creating or retaining 5,521 jobs with an average wage of $44,844 and a capital investment of $393 million.
Funding Florida’s Rural Areas ($2,400,000)
The FY2010-11 appropriation for the Rural Infrastructure Fund is $1.1 million. The appropriation for the Rural Community Development Revolving Loan Fund and the Regional Rural Development Grant Program is $1.3 million.
Rural areas are critically important to Florida’s economic strength and diversity. To promote increased growth opportunities, the legislature again this year funded the Rural Infrastructure Fund and the Rural Community Development Revolving Loan Fund. These programs provide financing for infrastructure projects and grants used by regional organizations to encourage rural development, respectively.
Protect Florida’s Defense Industry ($6,000,000)
Prior to the announcement of the FY2010-11 budget and its appropriation for defense programs, funding for supporting Florida’s military assets had been trending downward – decreasing from as much as $4 million in FY2006-07 to $1.5 million in FY2007-08 and FY2009-10.
Florida’s defense industry and 20 military bases rank third in the state, behind tourism, in their economic impact (revenue and jobs) to the state. Defense-related spending in Florida accounts for
$52 billion, or 7.5 percent of the gross state product. Investments in Defense Infrastructure Grants and Defense Reinvestment Grants support Florida’s military facilities, defense communities, and military families.
Legislation Supported by Enterprise Florida
Rural Enterprise Zone
Upon the request from a rural county to have their catalyst site annexed into the closest enterprise zone, the Office of Tourism, Trade and Economic Development (OTTED) is now vested with the authority to grant such a designation.
Currently, there are four rural catalyst sites, located in Highlands, Calhoun, Suwannee, and Columbia counties. Highlands and Calhoun counties are already designated as rural enterprise zones. The legislation passed the House and Senate. When the Governor signs this legislation both Suwannee and Columbia county plan to request rural enterprise zone designation.
The enterprise zone program offers businesses located in enterprise zones corporate and sales tax credits for hiring residents of enterprise zones. Sales tax refunds are offered to businesses located in a zone that purchase building materials and business equipment for use in the zone. Corporate tax credits are available to new and expanding businesses that locate or expand their facilities in a zone.
Bill Information: The sponsoring legislation was House Bill 843, by Representative Debbie Boyd and Senate Bill 1724, by Senator Charlie Dean.
Status: Signed into law by the Governor on May 26, 2010.
Military Support Legislation
The gains from this legislation are:
1. Florida statute on growth management concerning military base encroachment has been strengthened.
2. Military families are now allowed to retain their homestead exemptions when they are transferred out of state.
3. For newly arriving military spouses, Florida will grant an interim acceptance (six months) of their professional licenses from another state.
Bill Information: House Bill 7129, by the House Committee on Military and Local Affairs, was passed by both the House and the Senate.
Status: Signed into law by the Governor on June 1, 2010.
Florida Infrastructure Fund
A bill to establish an Infrastructure Fund that would leverage private investment through state tax credits passed the House but was not taken up by the Senate. This new financing tool would have expanded the ability of the Florida Opportunity Fund to attract more capital to Florida and support the construction of Florida-focused infrastructure projects such as roads, bridges, railways, ports, power stations, utilities, water, wastewater, solar, and so forth.
The program has impressive tangible benefits to Floridians and the state that include:
§ attracting up to $4 billion of private capital to Florida;
§ creating thousands of jobs in Florida through infrastructure projects supported by the fund;
§ creating permanent infrastructure assets in Florida;
§ alleviating budget pressure, by leveraging private capital to help government meet its public infrastructure needs; and
§ accelerating the deployment of infrastructure funds and speeding the recovery of the Florida economy.
Bill Information: House Bill 7243 passed the House but was not taken up by the Senate.
Status: Died in Senate messages.
New Markets Development Program
The definition of a “qualified active low-income community business” has been changed to match that of the federal New Markets Tax Credits program. Additionally the “cure period” now allows six months instead of 90 days to cure a failure to make a timely investment, the same amount of time granted under the federal New Markets Tax Credits program. Also, there is now a limit of one time per 7-year credit period in which a correction to a qualified equity investment may be made.
In 2009, the Florida Legislature created the Florida New Markets Development Program (NMDP) to provide state tax credits for investments in low-income communities. Tax credits allocated may be used to offset corporate income or insurance premium tax liabilities. The program is designed to make the state more attractive to national investors who are deciding where to invest funds raised under the federal New Markets Tax Credits program by creating a state NMDP similar to the federal program.
Bill Information: The language from this legislation was amended onto Senate Bill 1752, which passed the House and the Senate.
Status: Signed into law by the Governor on May 28, 2010.
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