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16
E MPLOYER Winter 2002 Vol. 2, No. 1 (Continued on page 3) What’s Inside Common Sense The Political Fires by Jon L. Shebel 440-34 or Fight by marian Stiles Issue Roundup by Curt Leonard Behind the Campaign Promises by Jacquelyn Horkan AIF’s Team of Lobbyists The Business at Hand A publication of ssociated Industries of Florida Service Corporation Reviewing Exemptions the Right Way F i n a n c e & T a x a t i o n By Curt Leonard S enate President John McKay (R- Bradenton) is wending his way through Florida on a public speaking tour in an attempt to build support for reform of Florida’s tax structure. In speech after speech, he is sharing his concerns about Florida’s current tax struc- ture, predicting tough times unless it is reformed, and promising a more stable fiscal future for Florida if his plan is enacted. His ambitious project could not come at a worse time, both economically and politically. Quick on the heels of the December special session when they patched a $1.3 billion hole in the 2001-02 fiscal-year budget, lawmakers are now dreading a repeat of the exercise in the 2002 regular session. McKay’s tax reform efforts are akin to changing a tire on a moving car: the timing is all wrong. Substantive changes in tax policy are best engineered during the good times, when the treasury is flush and people can think with their heads, not when the elderly are losing their Medicaid-funded prescrip- tion eyeglass-benefits because of budget cuts. While McKay has spent months promot- ing his plan, he began releasing the details for public scrutiny only recently. This is a nettlesome approach to shaping public policy. Shielding the proposal from decision- makers inside and outside of government until the last moment only complicates the ability to win over the very people needed to usher it through the legislative process. McKay defenders would point out, with some justification, that the release of a bill of this scope simply lets critics pick it to pieces before it ever gets a hearing. Liberating that proposal to public scrutiny, however, makes more sense from a political and a policy standpoint. At the minimum, you find out quickly whom your enemies are, which gives you an opportunity to win them over by fixing any flaws in your proposal. Something this complex can’t be rammed through the Legislature. In addition, the idea of tax reform in Florida is akin to the Flat Earth Society announcing it will be looking for other options to explain our planet’s circumference: there just aren’t that many alternatives. Florida’s constitution prohibits a personal income tax. It also bans the state from levying an ad valorem property tax on real property. Another constitutional provision limits the growth in assessments on residential property in order to prevent rapid increases in property taxes. That leaves the state’s consumption taxes, principally sales taxes, as the only instrument sizeable enough for “reforming.” Some of McKay’s objections to the sched- ule of exemptions from the sales tax do have merit: hair-care products are taxed, haircuts are not; laundry detergent is taxed, dry cleaning is not; lawn mowers are taxed, lawn care is not.
Transcript
Page 1: AIF_FL Tax Exemptions

EMPLOYER Winter 2002 • Vol. 2, No. 1

(Continued on page 3)

What’s Inside

Common SenseThe Political Fires

by Jon L. Shebel

440-34 or Fight by marian Stiles

Issue Roundup by Curt Leonard

Behind theCampaign Promises by Jacquelyn Horkan

AIF’s Team ofLobbyists

The Business at Hand

A publication of ssociated Industries of Florida Service Corporation

Reviewing Exemptionsthe Right Way

F i n a n c e & T a x a t i o n

By Curt Leonard

Senate President John McKay (R-Bradenton) is wending his waythrough Florida on a public speaking

tour in an attempt to build support forreform of Florida’s tax structure.

In speech after speech, he is sharing hisconcerns about Florida’s current tax struc-ture, predicting tough times unless it isreformed, and promising a more stable fiscalfuture for Florida if his plan is enacted.His ambitious project could not come at aworse time, both economically and politically.Quick on the heels of the December specialsession when they patched a $1.3 billion holein the 2001-02 fiscal-year budget, lawmakersare now dreading a repeat of the exercise inthe 2002 regular session.

McKay’s tax reform efforts are akin tochanging a tire on a moving car: the timing isall wrong. Substantive changes in tax policyare best engineered during the good times,when the treasury is flush and people canthink with their heads, not when the elderlyare losing their Medicaid-funded prescrip-tion eyeglass-benefits because of budget cuts.

While McKay has spent months promot-ing his plan, he began releasing the detailsfor public scrutiny only recently. This is anettlesome approach to shaping publicpolicy. Shielding the proposal from decision-makers inside and outside of governmentuntil the last moment only complicates theability to win over the very people needed to

usher it through the legislative process.McKay defenders would point out, with

some justification, that the release of a bill ofthis scope simply lets critics pick it to piecesbefore it ever gets a hearing. Liberating thatproposal to public scrutiny, however, makesmore sense from a political and a policystandpoint. At the minimum, you find outquickly whom your enemies are, which givesyou an opportunity to win them over byfixing any flaws in your proposal. Somethingthis complex can’t be rammed through theLegislature.

In addition, the idea of tax reform in Floridais akin to the Flat Earth Society announcing itwill be looking for other options to explainour planet’s circumference: there just aren’tthat many alternatives. Florida’s constitutionprohibits a personal income tax. It also bansthe state from levying an ad valorem propertytax on real property. Another constitutionalprovision limits the growth in assessments onresidential property in order to prevent rapidincreases in property taxes. That leaves thestate’s consumption taxes, principally salestaxes, as the only instrument sizeable enoughfor “reforming.”

Some of McKay’s objections to the sched-ule of exemptions from the sales tax do havemerit: hair-care products are taxed, haircutsare not; laundry detergent is taxed, drycleaning is not; lawn mowers are taxed, lawncare is not.

Page 2: AIF_FL Tax Exemptions

C o m m o n S e n s e

2 Employer Advocate • Winter 2002

The PoliticalFires

EMPLOYER

Published byAssociated Industries

of Florida ServiceCorporation to inform

readers about issuespertinent to Florida’sbusiness community.

© 2002. All rightsreserved.

PUBLISHERJon L. Shebel

ASSOCIATE PUBLISHERStephen B. Trickey

EDITORJacquelyn Horkan

DESIGNERJ. Gregory Vowell

EDITORIAL OFFICES516 North Adams St.

Post Office Box 784Tallahassee, FL

32302-0784Phone: (850) 224-7173

Fax: (850) 224-6532E-mail: [email protected]

By Jon L. Shebel, Publisher

The headline caught my eye: “Caughtbetween political fires: Kids who can’t read.”

This particular item, by Orlando Sentinelcolumnist Myriam Marquez, explored thebattle between lawmakers and school districtsover the policy of social promotion, whichallows children to advance to the next gradewhether or not they’ve mastered the skills,particularly reading, that they were supposedto have learned during the past year. Lawmak-ers thought they had ended social promotion;some school districts found a loophole thatallowed them to continue its practice.

No problem with a political solution everreally gets fixed because laws cannot bewritten loophole-free. Solving one problemusually creates another. We’re all caughtbetween political fires because they are a partof our American culture. Unlike our enemiesin the Middle East and elsewhere, whogovern through tyranny and violence, weelect people and send them to city halls, statecapitols, and Washington, D.C., to make thedecisions about the issues affecting our lives.

Many of the problems we elect them tosolve just disappear. Remember the hullaba-loo about soaring gas prices during thesummer of 2000? Now prices have droppedto a three-year low without any help from thegovernment. We sometimes discover that ouremergencies are simply misunderstood. Takethe so-called health insurance crisis of the1990s. Researchers discovered that most ofthe uninsured were that way either tempo-rarily or by their own choice. There is a

smaller core of people who want insurancebut can’t get it for whatever reason, usuallycost. A government program may seem theeffortless solution to their dilemma, but theeasy answers are rarely the best in a civiliza-tion and economy as fluid and complicatedas ours.

And then there the problems are so intrac-table that no political action can tame them,mostly because human nature is what it is.Most of our bad habits and potential forfailure are beyond the purview of lawmakersand bureaucrats, who, no matter what someof them may believe, have no power to saveus from our own mistakes.

Newcomers to Tallahassee experience aninitial shock at the haphazard and slightlyrepulsive ways of politics. Some of the messarises from the nature of the problems wepresent to politicians, expecting an easy fix.Some of it can be blamed on the fact thateverybody involved in the process has differ-ent interests to protect, different definitions ofthe issues, and different ideas about the bestmethod for fixing them. Lawmaking is onlyinfrequently a zero-sum game, but on the mostmeaningful legislation someone is alwaysgoing to be disappointed by the results.

Most of us eventually realize that, as uglyas the system is, it works astonishingly well.The rest never recover from the clash withreality and remain somewhat like teenagersabashed by the capacity of parents for embar-rassing their offspring. They usually end upcondemning politics for its very strengths.

One of its unappreciated virtues is the snailpace of lawmaking. Haphazard remedies canrarely be rushed through the Legislaturebecause the process of moving from sugges-tion to statute is so tortuous. And it is thatway for our own protection.

So, the political fires burn. At AssociatedIndustries we’re there year after year with thefire extinguishers on the ready to protect thebusiness community from the occasionalinferno and to fan the flames of our state’seconomy. ■

Jon L. Shebel is president and CEO of Assoc-iated Industries of Florida and affiliatedcompanies (e-mail: [email protected]).

Page 3: AIF_FL Tax Exemptions

Employer Advocate • Winter 2002 3

“Tax neutral,”

however, is a

somewhat

misleading term.

A lot of taxpayers

will pay a little

less while a

few of them,

primarily

businesses, will

pay a lot more.

F i n a n c e & T a x a t i o n

Eliminating many of these silly and well-publicized exemptions, however, wouldbarely make an impact on revenues. Elimi-nating the exemptions on haircuts and drycleaning would pump a paltry $136.9million into the state treasury, an increase ofless than one-tenth of one percent. Whenlawmakers look to pad sales-tax revenue,they quickly find that the big pots of moneyare in exemptions designed to preventdouble taxation, or in items such as groceriesand medicine. That means that exemptionsthat apply to businesses provide the onlywiggle room for an increase in the sales tax.

McKay plans the repeal of a variety ofcurrent exemptions, with the exception ofso-called basic needs such as groceries,residential rent, health-care services, pre-scription drugs, and basic telephone service.He would also eliminate the alcoholic-beverage tax, the hospital-bed tax, and theintangibles tax. Everything else, apparently,will be up for grabs.

The tax reformers assure Floridians thathis proposal is tax-neutral because it wouldreduce the sales tax rate from six percent tofour percent. “Tax neutral,” however, is asomewhat misleading term. The state ofFlorida, theoretically, would realize neitheran increase nor a decrease in taxes, but theimpact on individual taxpayers will change.A lot of them will pay a little less while afew of them, primarily businesses, will paya lot more.

The Senate president wants to institution-alize the four-percent sales tax by carving itinto the stone of the state’s constitution.This taxation amendment would alsorequire a three-fifths vote in both housesof the Legislature to increase the tax rate oradopt any new exemptions.

AIF’s concerns with the McKay proposalare straightforward. Reducing the sales-taxrate to four percent and hurriedly decidingwhich exemptions to resuscitate creates anartificially compressed and chaotic environ-ment for reviewing Florida’s current sales-tax exemptions.

Yes, some exemptions are silly. Others are

ill advised. Yet some are absolutely necessaryto Florida’s business community and theeconomic health of Florida. Detecting the truenature of each exemption will take time andcalmness about the state’s finances. McKay’sproposal allows neither condition to prevail.

The Senate president helped engineer thecreation of a tax-reform commission that hasbeen meeting over the last year. He appointedseveral of it members, including himself.Another commission member is RandyMiller, AIF’s senior executive vice president.The commission is recommending anapproach to the reform of the state’s taxcode that differs from McKay’s chosen route.

Both the commission and AIF embraceMcKay’s contention that some exemptions arewithout merit. While McKay seeks a wholesaleabandonment of all but a few exemptions,AIF and the commission are seeking a reviewof each and every sales-tax exemption on thebasis of its public policy merits, without anypredetermined conclusions.

Although this procedure may not draw thepraise of the editorial boards at the state’snewspapers, it would yield practical resultswithout unnecessarily jeopardizing those

(Continued from page 1)

Page 4: AIF_FL Tax Exemptions

4 Employer Advocate • Winter 2002

L o n g T e r m C a r e

McKay’s mining

and silicon-

technology

exemptions,

sound in their

construction and

rationale, are just

the sort that

could be lost in

a scuffle brought

on by his own

proposed method

of tax reform.

exemptions that can withstand scrutiny.In 1998, Senator McKay sponsored many

bills, but two are particularly noteworthyat this juncture. One provided a sales-taxexemption for mining and processingequipment purchased for use in phosphateseverance, mining, or processing operations.The other relaxed stipulations on a sales-taxexemption for equipment and machinerypurchased for the production or manufactureof silicon technology products.

The silicon technology bill passed in thefirst year it was introduced while the miningexemption took another year to gain legisla-tive approval. Both exemptions relied on atheory that AIF heartily endorses. Any salestaxes applied to manufacturing inputs —materials, equipment, or machinery a companybuys to produce its product — representspoor public policy and harms the state’seconomy. Such taxes constitute doubletaxation and place Florida’s manufacturersat a continuing and fatal disadvantage toout-of-state competitors.

In 1998 a line-by-line review of all thecurrent sales-tax exemptions was publishedby the Senate Fiscal Resources Committee.The findings were revised and updated forpublication in 2000. As expected, thecommittee’s report discovered that 162 ofthe state’s 225 non-services exemptions wereprobably without merit, or could have beenqualified as indefensible or bad policy.The rest, however, did stand up to scrutiny.AIF recommends that this book be used as astarting point for reviewing Florida’s taxstructure.

McKay’s mining and silicon-technologyexemptions, sound in their construction andrationale, are just the sort that could be lost ina scuffle brought on by his own proposedmethod of tax reform. McKay’s backing ofboth demonstrates his grasp of the differencebetween good and bad exemptions. We hopehis efforts at reform do not serve to under-mine the very tax policies he has historicallyand wisely advocated. ■

Curt Leonard is AIF’s governmental affairsmanager (e-mail: [email protected]).

Page 5: AIF_FL Tax Exemptions

Employer Advocate • Winter 2002 5

WHAT DO YOU NEED TO KNOW?On AIF’s Web sites you’ll find the information youneed — when you need it — on the political,legislative, and regulatory efforts that are shapingyour company’s future.

Associated Industries of Florida Online• Links to all of AIF’s web sites, both public and members only• Access to AIF research and issue pages• Ability to print mailing labels for Florida lawmakers

http://aif.com

Florida Business Insight Online – The Magazine of Free Enterpriseand Public Policy

• Timely analysis of political and economic developments• Expert advice on how to comply with laws and regulations• In Box — a tour of the outlandish and outrageous world of

current events• Dateline: Florida Business — the latest breaking news on

Florida’s economyhttp://flabusinessinsight.com

Florida Business Network (limited to AIF members)• Complete information on important business bills• AIF legislative positions and Voting Records• Articles from Florida’s leading newspapers• All past issues of Daily Brief, Weekly Legislative Update, and

Action Reports• E-mail notification on bills of interest• Member issue-response program

http://fbnnet.com

Florida Business United Online (limited to FBU members)• Expert analysis of the political climate• Exclusive updates from our political experts on news and

activities from the campaign trail• Complete voter registration, voter performance, and election

history profiles for every legislative district in the state• One-of-a-kind campaign contribution reports that rank

political contributions by occupation and industry• Detailed biographical and issue profiles for every qualified

state legislative candidatehttp://fbunet.com

Associated Industries Insurance Company• Information for injured workers about how to navigate the

workers’ comp system• Resources for employers to help them control their workers’

compensation costs• How-to Manual of Safety, providing all the tools to create a

workplace safety programhttp://aiic-insurance.com

Page 6: AIF_FL Tax Exemptions

It is the quest

for fees that

is driving

litigation

W o r k e r s ’ C o m p e n s a t i o n

6 Employer Advocate • Winter 2002

By Marian Stiles

There is a workers’ compensation claimantattorney in Tampa who drives about town ina Corvette with a license plate that reads“440-34.” It is a reference to the source of hiswealth: section 440.34, Florida Statutes, morecommonly known as the attorney-fee sectionof the workers’ compensation act.

Florida has some of the highest workers’compensation premiums in the United States.By law, however, Florida ranks toward thebottom of the list when it comes to benefitsdue directly to injured employees or to theirmedical providers.

Why are premiums so high when statutorybenefits are so low? The license plate on thatlawyer’s Corvette offers the quick answer.The manipulation of the system by claimantattorneys (the lawyers for injured workers)has rewritten the schedule of benefits so thatit nowhere near resembles the one in the lawbooks.

Most reasonable people in this statequickly realize that the treatment of attorneyfees under the workers’ compensation actrewards excessive litigation, thereby increas-ing the costs of the system.

Under the current law, aggressive claimantattorneys bring claims on minor issues for thesole purpose of securing a fee. They do thisby filing so-called shotgun claims, a scatter-shot of complaints and demands, hoping thatsomething will hit the intended victim,namely the insurance company, and/or theemployer. This approach is the easiest way tomeet the conditions for being awarded anattorney’s fee. It is the quest for fees that isdriving litigation; most of these lawyers lackany real desire to help desperate and needyinjured employees. The tail is wagging thedog.

Proof of the growth in litigation and itsaffects is abundant. The Florida Senate’sCommittee on Banking and Insurance foundthat the average cost per claim in Florida wascomparable to the cost nationwide in cases

where no attorney was involved. For litigatedclaims, however, the average cost per casewas 40 percent higher in Florida than else-where. This tallies with the National Councilon Compensation Insurance, which reportsthat attorney involvement in Florida has themost significant fiscal impact nationwide.

According to the “Workers’ CompensationResearch Institute’s Multistate Comparisons,1994-1999,” Florida had the highest litigationrate among the states surveyed. The maneu-vering over litigation begins even before aclaim is ripe. The state Division of Workers’Compensation has found that attorneys arenow involved in over 95 percent of the filingsfor requests for assistance, which is supposedto be Florida’s informal dispute-resolutionprocess. The “Multistate Comparisons,”which measures Florida’s experience inworkers’ comp with seven other large states,also reveals that defense-attorney involve-ment in Florida has almost doubled duringthe period covered by the study. It measureddefense-attorney involvement because datarelating to total payments to claimantattorneys were unavailable.

In 39 states with a system of privateworkers’ compensation insurance, the injuredworkers generally are responsible for the pay-ment of their attorneys’ fees. In 18 of these 39states, there are no circumstances in whichthe liability for the payment of the claimant’sattorney’s fees shifted to the employer/carrier.In many of the other states, even if attorneyfees are shifted to the employer/carrier undercertain circumstances, the amount of the feeswas limited to a certain amount per accident,

440-34 or Fight

Page 7: AIF_FL Tax Exemptions

Visit

http://aif.com

for the full

story on

workers‘

compensation

reform

Employer Advocate • Winter 2002 7

thus discouraging litigation over minorissues. Florida’s present system not onlyencourages the litigation of minor issues,it encourages the claimant to litigate oneissue at a time, prolonging the process anddriving up the expenses paid to attorneysfor both sides.

The business community, together withthe insurance industry, is coming togetherto try to convince the Florida Legislaturethat it must take action to bring down thecost of workers’ compensation premiumsand increase the amount of benefits to injuredemployees. We believe those goals are notmutually exclusive if the Legislature makesthe correct statutory revisions to the workers’compensation act.

As was clear to the lawmakers in 39 otherstates, limiting the amount of attorney in-volvement in the workers’ compensationsystem will have the effect of reducing thecosts of the system. In short, an attorneyshould get involved only when the amount ofbenefits is relatively significant and the skillof the attorney is useful and cost-effective; orwhere a real benefit has not been provided.

AIF is presently working with otherbusiness and insurance groups to develop abill to be presented to the Florida Legislaturein the 2002 legislative session. One of therecommendations would provide that theinjured employee pay his own attorney’s feesexcept in limited circumstances. The proposalwould allow fees on medical-only claims, butwould require that the amount of attorney’sfees paid be proportionate to the amount ofbenefits secured by the attorney. In otherwords, an attorney could not receive a $5,000fee for securing a $100 benefit for his client,which is common under today’s statute.It also places the burden on the employer/carrier to pay fees on controverted cases,based on the statutory schedule for contin-gency fees.

The proposed bill provides for othercrucial amendments to the existing law. Forone, we are asking that the Legislature definethe term “major contributing cause,” which isfound in the statute. Presently, an injury isonly considered to be the responsibility of the

employer/carrier if a work-related accidentwas the “major contributing cause” of theinjury and need for treatment. The statutedoes not set forth a definition of that phrase,so the appeals court has defined the term tomean that the workplace accident must begreater than any other single cause contribut-ing to the disability or need for treatment.

The approach taken by the court is not inaccord with the legislative intent. The pro-posed bill would define “major contributingcause” to specify that a work-related accidentmust be more than 50 percent responsible forthe injury and subsequent disability or needfor treatment in order for the treatment tobe compensable.

The proposed bill also seeks to overturna recent Florida Supreme Court case thatallows an injured worker easily to get aroundthe immunity provisions in the workers’compensation act and sue his employer incivil court. The proposed amendment wouldrequire that an employee seeking to escapethose immunity provisions prove that theemployer had a specific intent to cause deathor injury to the employee. This should serveto stem the rush of civil lawsuits now beingfiled against employers in state court byreturning the system to its legislative intentof limiting an injured worker’s options toreceipt of workers’ compensation benefits.

We are working hard to educate the legisla-tors on the foregoing issues and many otherissues important to the business communityand the overall health of Florida’s economy.Convincing the legislature to take decisiveaction this year, however, will require acohesive business and insurance coalition.

Let your senator and representative knowthat next year is too long to wait. We needaction this year in order to stop more attor-neys from using section 440.34 of the workers’compensation law to finance their expensivetastes. ■

Mary Ann Stiles is the founding partnerof the law firm of Stiles, Taylor & Grace,and serves as general counsel toAssociated Industries of Florida(e-mail: [email protected]).

Page 8: AIF_FL Tax Exemptions

8 Employer Advocate • Winter 2002

B u s i n e s s R e p o r t

Artificially

increasing the

level of wages

paid will cause

businesses to shut

down, reduce

hours, reduce

staff, and/or

increase prices.

By Curtis Leonard

Florida Cabinet ReorganizationIn November 1998, Florida voters approved

a Cabinet-restructuring amendment to the stateconstitution that will take effect on January 7,2003. The Cabinet positions of treasurer andcomptroller will be merged into one called thechief financial officer. The secretary of stateand commissioner of education will be elimi-nated from the Cabinet and become appointedpositions. The new Cabinet will consist of thechief financial officer, the attorney general, andthe agriculture commissioner.

In addition to the powers assigned by theconstitution to the treasurer and the comp-troller, both officers have regulatory dutiesassigned to them by statute. That means thatthe Florida Legislature must enact a law todivvy up the regulatory duties. In 2000 and2001, the Legislature failed to take action so itmust do so in 2002, before the revisions takeeffect next year.

While some want to collapse the regulatoryauthority of the comptroller and treasurerinto the office of the chief financial officer, AIFbelieves that the following structure, proposedby current Comptroller Bob Milligan, is thepreferable alternative:

• regulatory functions remain separate andare assigned to one department with twocommissions, one for financial servicesand one for insurance

• department is managed by an executivedirector under the supervision of thegovernor and Cabinet

• commissioners have the authority forfinal agency action

• commissioners are subject to Senateconfirmation

This structure provides for the simplifica-tion and consolidation of governance, a desireexpressed by the vote of the people in 1998,while at the same time providing for thenecessary public and legislative oversightof the regulatory functions. In addition, itprovides for a fair and equitable regulatory

Issue Roundup environment for the insurance and bankingindustries without diminishing the historicoversight and enforcement authority prac-ticed by the current treasurer and comptroller.

Charter School FundingAIF and the business community have

strongly supported the continued developmentand growth of charter schools as a method toimprove public education. Many of AIF’smembers have plans or have openly expressedinterest in supporting and setting up charterschools because they provide an employeebenefit that will assist in recruitment andretention of employees. These charter-schoolendeavors are efficient and effective and canbe placed on or near an employer’s facility.

Charter schools present an opportunitythat is genuine and should not be left tothe uncertain whims of discretionary, non-recurring budget dollars. AIF recommendsand supports efforts to move charter-schoolfunding out from the general revenue budgetand into a recurring funding source. We alsoprefer that such funding be bonded.

Workforce FundingFlorida’s community colleges receive two

types of funding from the state. The first isdirect funding, which underwrites traditionalexpenses such as operations, administration,personnel, and supplies. The second type offunding is directed toward workforce develop-ment, which is channeled to both the commu-nity colleges and, to a lesser degree, the Kthrough 12 public schools. Workforce develop-ment programs exist to train and retraincollege-age and adult students in specific skillsin high demand by Florida’s employers.

With the current business downturn, somestate lawmakers have expressed an interest inexpanding the state’s economic base to lessenits dependence on tourism. Adequate fundingfor the state’s community-college systemwould be an important first step. Florida’semployers in the manufacturing, engineering,and technology sectors are desperatelyseeking qualified employees. The communitycolleges need additional workforce funding tomeet that demand. In addition, trained and

Page 9: AIF_FL Tax Exemptions

Employer Advocate • Winter 2002 9

equipped graduates would only further serveto stoke the fires of the entrepreneurialactivity that creates new jobs.

Mandatory Medical MalpracticeInsurance

While AIF has long been an advocate of tortreform, we have never opposed a citizen’sability to access the courts. Under current law,however, many victims of medical malpracticelack the ability to seek redress in the courtroombecause state law does not require Florida’sdoctors to carry medical malpractice insurance.If a doctor without this insurance has shieldedhis assets, as many do, he escapes punishmentfor his negligence or incompetence and hispatient must go without compensation.

Requiring all practicing licensed physiciansin Florida to carry medical malpractice insur-ance will ensure that the risk is spread equita-bly throughout the medical system, loweringthe costs for all. In addition, such mandatedinsurance will assure Floridians that they do,in fact, have some legal protections and anability to be made whole if they are the victimsof negligent or incompetent doctors.

Sunset of Business Damages UnderEminent Domain

Landowners and business owners in Floridahave a constitutional right to be compensatedfor property they lose as a result of eminentdomain or condemnation actions. Businessowners in Florida also have a statutory right tocollect business damages in an eminent domainproceeding.

If the Department of Transportation, forexample, expands a road in front of abusiness’s entrance, blocking or inhibitingaccess to the business could cause a substan-tial loss in income or result in outrightclosure. In certain circumstances, the businessowner can sue the department to recover theincome lost as a result of the road-expansion.In 1999 lawmakers reduced from five yearsto four years the time an owner had to bein business in order to gain standing forcompensation from the state. This provisionwill “sunset,” or expire, this year.

AIF urges lawmakers to extend the four-year

threshold for business damage claims. It is onlyethical and fair that businesses whose ability toengage in commerce is inhibited or severelycompromised by state road building, roadexpansion, and road maintenance be allowed toseek compensation for their losses from the state.

Living Wage MandateA movement is afoot throughout the

country to mandate “living wages” for so-called low-wage workers. Most living wagesare set at up to two times the national mini-mum wage, or more. Some 60 counties andcities have mandated some version of a livingwage for municipal employees, including, insome cases, employees of private companiesthat hold government contracts.

The living-wage movement has nowexpanded its efforts to try to include in themandate employees of private companies whoare not executing government contracts. Thetargets for these mandates are usually airlines,restaurants, hotels, motels, and other serviceproviders associated with the hospitalityindustry. In San Francisco, airport baggagehandlers received a mandated increase in payfrom $4.75 an hour to $10 an hour, plus tipsand health insurance. Santa Monica, California,mandated a living wage for workers in hotels,restaurants, and other businesses while limit-ing its application to businesses with $5million or more in annual sales. As a result,one major eatery will reduce its business hoursand staff to come in under the threshold. Searshas said it will relocate its store from that area.

A living-wage mandate would cause extra-ordinary damage to the hospitality industry.Artificially increasing the level of wages paidwill cause businesses to shut down, reducehours, reduce staff, and/or increase prices.Discretionary dollars, typically spent in thehospitality sector, would simply go some-where else, decreasing the level of businessactivity indefinitely. Finally, such a skewedwage increase would attract more qualifiedapplicants, pushing aside the very employeesthe wage increase was designed to assist. ■

Curt Leonard is AIF’s governmental affairsmanager (e-mail: [email protected]).

Page 10: AIF_FL Tax Exemptions

10 Employer Advocate • Winter 2002

E l e c t i o n s

“If ever there were a candidate who just-ified AFE’s creation, that was W.C. Gentry,”says Marian P. Johnson, AIF’s senior vicepresident for political operations.

Allies for BusinessAFE, short for the Alliance for Florida’s

Economy, is a for-profit corporation created in1999 as a joint venture between AIF ServiceCorporation (AIFSC) and Tidewater Consult-ing, a political and governmental affairsconsulting firm formed by Tom Slade, aformer state senator, representative, and GOPparty chairman.

“There are some things candidates wantyou to know about them,” says Johnson, “andother things that they know won’t help themget elected. AFE is there to inform votersabout the candidates’ past stands on issuesthat are important to employers.”

Political action committees and campaigncontributions have worked well as a strategyfor affecting the political makeup of stategovernment. In receiving information, how-ever, voters are often captive to the anti-free-enterprise bias of the media. Other special-

By Jacquelyn Horkan, Editor

If a politician in your district running as apro-business Republican, was a lifelongDemocrat who had just switched parties

four months earlier, you’d want to know,right? Especially if he was trying to keepsecret the millions he had earned by suingcorporations.

That was the quandary faced last Augustby voters in Senate District 6, which encom-passes parts of Clay, Duval, and St. Johnscounties. Necessitating the special electionwas the appointment of Sen. Jim Horne tohead the state’s new education department.His departure meant the loss of a stalwartsupporter of the free-market system in theSenate.

Running to replace Horne was one truepro-business candidate, Stephen Wise, aformer representative who was forced out ofthe House by term limits in 2000. His stron-gest opponent was W.C. Gentry, a wealthytrial lawyer (more about that later) whosedalliance with the GOP began on April 14,2001, when he switched his party affiliationfrom Democrat to Republican.

Behind the Campaign Promises

The AFE

brochures

unmasked Bryan

and Gentry’s

newfound

conservatism

as political

opportunism.

Page 11: AIF_FL Tax Exemptions

Employer Advocate • Winter 2002 11

For more

information

on the issues

covered in

Employer

Advocate, visit

AIF’s Members

Only Web site,

http://fbn.com

interest groups, including organized medi-cine, unions, and personal-injury lawyers,have long made an enormous financialcommitment to influencing elections. AFE isone weapon that business people can use tofight back against those special interests.

“A lot of companies either make campaigncontributions directly or through [politicalaction committees],” says Johnson. “But that’snot enough anymore to protect pro-businessinterests in the Legislature.”

In addition to the District 6 face-off be-tween Wise and Gentry, AFE deployed itsresources in an earlier contest: the SenateDistrict 18 seat had been vacated by CharlesBronson who, like Jim Horne, was a trustedfriend of the business community. Bronsonresigned from his office when he was ap-pointed by Gov. Jeb Bush to fill the Cabinetpost of commissioner of agriculture.

The loss of two longtime supporters ofemployers was not the only similarity be-tween the two races. Both special electionsoccurred in districts where voters werevirtually guaranteed to select a Republican.As was the case with Wise in District 6, theDistrict 18 election brought back to politicsHoward Futch, a popular veteran of theHouse of Representatives who was term-limited out of his seat in 2000.

In a mirror image of Gentry’s candidacy,District 18 featured the aspirations of a first-time politician, Glenn Bryan, a retired physi-cian, who had switched his registration to theGOP on Valentine’s Day 2000. Bryan stronglybacked measures to give HMO subscribersthe ability to collect punitive and non-eco-nomic damages when they sued their healthplans, thus increasing health-care costs acrossthe board.

One major difference between Bryan andGentry was the latter’s personal wealth.Gentry had made his first fortune fromcontingency fees in medical malpracticelawsuits. He was a member of the so-called“Dream Team” of personal-injury lawyersthat forced tobacco companies into a settle-ment with the state. Gentry’s total take fromthe tobacco legislation is estimated eventuallyto reach $100 million. He is also the lead

plaintiff attorney in the litigation challengingthe business-backed 1999 tort-reform law.

Buoyed by campaign contributions fromtheir colleagues and backed by their profes-sions’ campaign machines — and, in Gentry’scase, financed by his vast personal fortune —both men were positioned to recreate them-selves as the kind of conservative candidatesthe voters in their districts preferred.

Who’s the Real Conservative?“In District 6 and 18, there were candidates

who were calling themselves conservativewhen they weren’t,” says Johnson. “Both ofthem had in the past worked with theirprofessional associations to try to defeatpriority legislation for business people.”

In both races AFE’s job was to help votersscreen out misinformation. AFE helped votersidentify the candidates who had the trueliberal pedigrees. One particularly effectiveseries of campaign pieces let the electorateknow that both Bryan and Gentry had beenregular and steady contributors to suchliberal headliners as Al Gore and Bill Clinton.The AFE brochures unmasked Bryan andGentry’s newfound conservatism as politicalopportunism.

“Trial lawyers and doctors raise moneyyear-round every year for their politicaloperations because the livelihood of bothgroups is so dependent on what legislatorsdo,” says Johnson. “Business people aren’t asgenerous with their donations because theyhave so many other things to spend theirmoney on. That’s a challenge we have towork to our advantage.”

While AFE could not match the spendingof the organized-medicine and trial-lawyercoalitions, it was able to utilize its resourcesmore effectively through its reliance on acustomized, proprietary methodology. Akinto a trade secret, the methodology allows AFEto achieve greater results with less money byapplying the standard tools of campaigningin a unique way in order to inform votersabout their choices.

(Continued on back page)

Page 12: AIF_FL Tax Exemptions

ssociated Industries of Florida

Jon L. Shebel – President & CEO of AssociatedIndustries of Florida and affiliated corporations ...more than 33 years as a lobbyist for AIF ...directs AIF’s legislative efforts based on AIFBoard of Directors’ positions ... graduated fromThe Citadel and attended Stetson UniversityCollege of Law.

Randy Miller – Senior executive vice president ofAssociated Industries of Florida ... responsible forthe governmental affairs operations of AIF ...former special consultant to Pennington, Moore,Wilkinson, Bell & Dunbar, P.A. ... former executivedirector of the Florida Department of Revenue ...expertise in state and local tax issues, includingconsulting, lobbying, and government agencyliaison ... B.S. from Florida State University.Issues: Taxation, general issues

Mary Ann Stiles, Esq. – General counsel ofAssociated Industries of Florida ... managingpartner in the law firm of Stiles, Taylor, & Grace,P.A. ... more than 29 years of legislative andlobbying expertise before the Legislature andother branches of government ... graduate ofHillsborough Community College, Florida StateUniversity and Antioch Law School.Issues: Workers‘ compensation reform

Chris Verlander – Senior vice president - corpo-rate development of Associated Industries ofFlorida ... more than 22 years of expertise ininsurance lobbying activities ... former president(1994-1997) and vice chairman (1997-1999) ofAmerican Heritage Life Insurance Company ...B.S. from Georgia Tech and M.B.A. from theUniversity of Florida.Issues: Cabinet reorganization

Curtis L. Leonard – Governmental affairs managerof Associated Industries of Florida ... over 15 yearsof experience in lobbying the executive andlegislative branches of Florida government...areas of specialization: health care, taxation,private property rights ... former staff analystwith the Florida Legislature ... B.A. in politicalcommunications from Florida State University.Issues: General issues

Barney T. Bishop III – President & CEO, TheWindsor Group ... former aide to state TreasurerBill Gunter ... former executive director of theFlorida Democratic Party ... more than 22 years ofexperience in legislative and political affairs ...areas of expertise include appropriations, criminaljustice, and behavioral health care issues ... B.S. inpolitical & judicial communication from EmersonCollege in Boston.Issues: Appropriations, cabinet reorganization, civil-service reform, nursing-home reform, judicial reform

Ronald L. Book, Esq. – Principal shareholder ofRonald L. Book, P.A. ... former special counsel incabinet and legislative affairs for Gov. BobGraham ... 29 years of experience in governmentand legislative activities ... areas of expertiseinclude legislative and governmental affairs withan emphasis on sports, health care, appropriations,insurance, and taxation ... graduate of theUniversity of Florida, Florida InternationalUniversity, and Tulane Law School.Issues: Economic development, regulatedindustries, transportation

Arthur Reginald Collins – President & CEO ofPublic Private Partnership, Inc....former DeputyReceiver at Department of Insurance...served asLegislative Director for Insurance CommissionerBill Gunter...former Staff Director of the Office ofBlack Affairs...former consultant to the FloridaHouse on small business, economic and minorityaffairs...B.S. from Florida A&M University ...over20 years of legislative lobbying experience at thestate and federal level.Issues: Elder & long term care, appropriations

Keyna Cory – President, Public AffairsConsultants, a public affairs and governmentalrelations consulting firm ... more than 17 years ofexperience representing a variety of clients, fromsmall entrepreneurs to Fortune 500 companies,before the Florida Legislature ... majored inpolitical science at the University of Florida.Issues: Health regulation, nursing-home reform,banking & insurance, cabinet reorganization

AIF’s contingent of lobbyists is not only one of the largest in the state, it comprises the best and brightest names in Florida politics. These men and women reached the pinnacles of government leadership,

steered the course of state party politics, and served in the administrations of former presidentsof the United States. Their knowledge encompasses the issues and the processes of lawmaking. And theyunderstand business, running their own companies and facing the challenge of meeting a payroll.

Seasoned veterans, they apply their skill and understanding to helping you achieve success in the marketplace.

Twenty-one lobbyists, representing almost 500 years of accumulated experience in politics and government, spent

Page 13: AIF_FL Tax Exemptions

Martha Edenfield, Esq. – Partner in Pennington,Moore, Wilkinson, Bell & Dunbar, P.A. ... more than17 years of lobbying experience before theLegislature and other branches of government ...areas of expertise include environmental andadministrative law ... graduate of Florida StateUniversity and Florida State University College of Law.Issues: Environment & growth management,nursing-home reform, cabinet reorganization,health care

Ralph Haben Jr., Esq. – Partner in the law firm ofHaben & Richmond, P.A. ... former speaker of theFlorida House of Representatives (1981-1982) ...as a member of the House from 1972 to 1982,served on every major committee and receivednumerous awards in recognition of legislativeaccomplishments ... B.A. from the University ofFlorida and J.D. from Cumberland College of Law.Issues: Workers‘ compensation

Frank Mirabella – Partner in the public andgovernmental relations firm of Mirabella, Smith& McKinnon ... more than 16 years of legislativelobbying experience ... B.S. in government fromFlorida State University.Issues: Government reform, regulated industries,cabinet reorganization

Jim Rathbun – President of Rathbun & Associates... more than 12 years of experience representingindividuals and entities before the Legislature, stateagencies, and the governor and Cabinet ... formerlyworked with the Florida House of Representativesand served as staff director of the House RepublicanOffice ... B.S. from Florida State University.Issues: Agriculture, commerce & economicdevelopment, ethics & elections, cabinetreoganization, civil-service reform

Ron Richmond, Esq. – Received his BA fromFlorida State University and his Juris Doctor fromStetson University...served in the Florida House ofRepresentatives beginning in 1972...electedRepublican minority leader in 1982 where heserved two years in that role...twice recognized asMost Effective Member of the Florida House ofRepresentatives...member of Real Property,Probate and Trust Law Section of Florida Bar.Issues: Workers‘ compensation, judiciary,government refrom

Tom Slade – President of Tidewater Consulting,Inc. ... more than 42 years of experience inpolitics and government ... Republican Party ofFlorida National Committeeman elect ... servedas state chairman of the Republican Party ofFlorida from 1993-1999 ... former staterepresentative and state senator ... served asvice-chairman of the Florida Taxation andBudget Reform Commission in 1990.Issues: General government, political affairs

Damon Smith – Partner in the public andgovernmental relations firm of Mirabella, Smith &McKinnon ... more than 17 years of legislativelobbying experience ... former south Florida aideto U.S. Sen. Lawton Chiles ... B.S. in journalismfrom the University of Florida.Issues: Banking & insurance, commerce &economic development, regulated industries,cabinet reorganization, civil-service reform,government reform

Arthur E. Teele Jr., Esq. – Commissioner of thecity of Miami ... chairman of the city of MiamiCommunity Redevelopment Agency ... formerchairman of the Metro-Dade Commission ...former vice president & general counsel ofAIF ... former administrator of the Urban MassTransportation Agency under the Reagan admin-istration ... also served on the President’s TaskForce on Urban Affairs ... B.S. from Florida A&MUniversity and J.D. from Florida State University.Issues: Local government, political affairs

John Thrasher, Esq.– Partner in the lobbying firmSouthern Strategy Group ... former speaker of theFlorida House of Representatives (1999-2000) ... asa member of the House from 1992 to 2000, wasinstrumental in protecting Floridians’ access to healthinsurance, shepherding tort reform legislation, andpromoting pro-free-market policies ... recognizedfrequently for legislative accomplishments ... B.S.and J.D. with honors from Florida State University.Issues: Does not lobby the legislature

Screven Watson, Esq. – Partner in SouthernConsulting Group ... more than 14 years ofexperience in Florida politics ... former executivedirector of the Florida Democratic Party ... hasworked with numerous Democratic Party officials,on both the national and the state scene ... B.A.from Southern Methodist University and J.D.from Nova Southeastern.Issues: Banking & insurance, environment,regulated industries, cabinet reorganization

John Wehrung – Tidewater Consulting, Inc. ...more than 13 years of experience in political andgovernmental affairs ... former political director ofthe Republican Party of Florida ... engineered the1996 GOP takeover of the Florida House ... served aschief of staff for the General Counsel’s Office at theRepublican National Committee from 1991-1993.Issues: Workers‘ compensation, ethics & elections

Gerald Wester– Governmental consultant withthe law firm of Katz, Kutter and Haigler, P.A. ...former chief deputy over Florida Department ofInsurance’s regulatory staff ... more than 26 yearsof lobbying experience ... expertise in insurance,banking, and health care issues ... Bachelor’s andmaster’s degrees from Florida State University.Issues: Health care, Health MaintenanceOrganizations (HMO‘s)

2 0 0 2 L O B B Y I N G T E A M more than 10,000 hours in the Capitol during the 2001 Legislative Session advocating for your business interests.

Page 14: AIF_FL Tax Exemptions

T h e B u s i n e s s a t H a n d

War RoomFlorida’s reapportionment sessions are

rarely peaceful, but then we haven’t had a lotof experience with them. Between 1885 and1962, Florida’s legislature remapped Florida’spolitical geography only twice, in 1925 and1945, with minimal changes.

A 1955 reapportionment session left Floridawith an historical oddity when lawmakersgave up on the task and simply returned homewithout adjourning. The session dragged on ina vacuum until the members’ terms expired onthe day of the 1956 general election, setting arecord for the longest session at 520 days.

In the 1960s a series of Supreme Court

decisions forced the Legislature to take onthe task of redistricting. Lawmakers’ abilityto apportion Florida’s population in equallypopulated districts was stymied, however, bya clause in the state constitution that requiredlegislative districts to follow county bound-aries and that mandated a minimum of onerepresentative per county and a maximum ofthree. Under that scheme, Dade Countywould have needed 100 House members inorder to to give its residents representationthat was equal to a small county such asJefferson.

Those constitutional limitations keptFlorida from achiev-ing a reapportion-ment plan thatmet constitutionalmuster. Finally, in1967, a panel of threefederal district courtjudges set asidecounty boundariesand adopted onFlorida’s behalf a planthat the U.S. SupremeCourt recognized assufficient.

Keeping in TouchIt’s been called the lobbyists’ bible; we call it Know Your Legislators,

and it’s available now. This pocket-sized guide, published by AIF, isthe original directory of the Florida Legislature. Every AIF membergets one complimentary copy, and additional copies are availablestarting at $5 each. Place an order by calling AIF’s publicationsdepartment, or make an on-line order on our Web site (http://aif.com).

Florida MonthlyAIF’s award-winning magazine, Florida Business Insight,

is back in a new form. AIF’s editorial staff is now providinga business section to the periodical Florida Monthly. As AIFmembers and AIIC insureds you receive a free subscriptionto Florida Monthly, the leading authority on work and playin the state of Florida. AIF members will also receivesteeply discounted rates for advertising in Florida Monthly.

For information on advertising or the magazine,contact Jacquelyn Horkan, AIF’s editor. ■

14 Employer Advocate • Winter 2002

Page 15: AIF_FL Tax Exemptions

Watch Your MailboxHave you returned your member or

subscriber profile yet?All AIF members should have received

a member profile in December, while AIICinsureds should have received a subscriberprofile. These forms allow you to customizethe information you receive from AIF. Unlessyou return the form, however, you’ll loseaccess to the valuable news available fromthe legislative Daily Brief and Weekly Update,along with the periodic action reports.

If you have any questions about themember and subscriber forms, call CindyBramblett, AIF’s executive manager formembership. Or you can visit http://aif.comto complete the profile on line. ■

Employer Advocate • Winter 2002 15

Let Us Hear

From You...

Associated

Industries

of Florida

Post Office Box 784

Tallahassee, FL 32302

Phone: (850) 224-7173

Fax: (850) 224-6531

E-mail: [email protected]

On the Web at

http://aif.com

In 1968 Florida voters approved a newconstitution mandating annual sessions anddecennial redistricting. Since that time, theonce-a-decade map-making ritual has becomea prolonged frenzy of political ambition andlegal maneuvering. The courtroom battlesover the 1992 reapportionment, for example,didn’t officially end until 1996 when lawmak-ers redrew the congressional map to satisfyU.S. Supreme Court objections to the thirddistrict, which had meandered acrossNortheast and Central Florida in a horseshoethat covered 14 counties over a course of250 miles.

This year may or may not be as conten-tious as 1992, but it does offer the businesscommunity greater opportunities to take partin shaping the political landscape. For $20,anyone can buy the software that the FloridaLegislature will be using to redraw the lines(the proprietary software is available onlineat http://www.leg.state.fl.us/senateredistricting/Order.cfm).

AIF will be monitoring the reapportion-ment process as part of its ongoing effort topromote a political climate that facilitates thegrowing prosperity of the people of Florida.A War Room that is equipped with all of the

technology and tools needed to analyze themaps drawn by the Legislature and otherinterest groups has been established at AIFheadquarters .

“It’s an added dimension to our overallpolitical objective,” says Marian Johnson, AIF’ssenior vice president for political operations.“Having this kind of intensive reapportion-ment effort mean that we’ll be able to watchout for the districts where voters preferpro-business candidates, Democrat andRepublican.”

The War Room is manned by Doug Bailey,a full-time consultant to AIF, who willanalyze every proposed plan for its effecton pro-free enterprise lawmakers. Johnsondescribes the effort as proactive.

“We won’t just be complaining or tryingto impede what the Legislature is doing,”she says. “We’ll come up with solutions thathelp legislators fulfill their duties while AIFpursues its job as advocate for Florida’semployers. ■

Jacquelyn Horkan is editor of and seniorwriter for the publications of AssociatedIndustries of Florida Service Corporation(e-mail: [email protected]).

Page 16: AIF_FL Tax Exemptions

PRESORTEDSTANDARD

US POSTAGE PAIDTALLAHASSEE FLPERMIT NO 904

ssociated Industries of Florida Service Corporation516 NORTH ADAMS STREETP.O. BOX 784 TALLAHASSEE, FL 32302-0784

For more, visit

http://aif.com

Employer Advocate • Winter 2002 16

E l e c t i o n s

The methodology, which produced stellarresults in the 2000 elections, came throughagain in 2001. Futch went on to win his runoffagainst Bryan by a margin of 56.2 percent to43.8 percent. In District 6, Wise decimated hisopponent by capturing 68.6 percent of theballots cast, while Gentry received just a littlemore than one out of every ten votes. With allof his money and all of his efforts to becomesomeone he wasn’t, Gentry couldn’t evenfinish ahead of the unknown andunderfunded third candidate in the race,former police officer Stephen Richardson.

Wise’s margin of victory appears to sug-gest that he never faced a serious challenge.The view from hindsight is not accurate inthis case, however. If Gentry’s false messagehad not been exposed by AFE, he very wellcould have ended election day as the newestmember of the Florida Senate.

Futch and Wise were both popular politi-cians, experienced campaigners, and goodcandidates who fit their districts, but eventhey couldn’t withstand the onslaught ofwell-financed opponents ready to say any-thing and be anything it took to win. Armedby AFE’s ability to make the truth known, thevoters were able to make informed decisions,choosing the candidates who could representthem and their interests the best.

“Business people have no choice but tofight back against their political enemies,”says Johnson. “Here at AIF, we’re just tryingto make sure that business people have theweapons they need to win.” ■

Jacquelyn Horkan is editor of and seniorwriter for the publications of AssociatedIndustries of Florida Service Corporation(e-mail: [email protected]).


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