The Fine Print

Will lawmakers bow to Crist on power struggle?

In two distinct moves, Gov. Charlie Crist on Wednesday pushed back against the GOP-controlled Florida Legislature.

Crist vetoed a proposed 2 percent pay cut for state workers making more than $45,000 at the same time he signed the state's $66.5 billion budget into law. Then later in the day Crist vetoed a sweeping state contracts bill that would have shifted more control over contracts to lawmakers away from the executive branch.

The ongoing political question is whether or not his fellow Republicans accept it and move on for the time being. Or will some maverick GOP lawmakers go ahead and buck Crist?

The issue surrounding the pay cuts is whether or not Crist even had the legal authority to do what he did on Wednesday. Crist vetoed the stand-alone provisio language that authorized the cut, a move that could run contrary to the state constitution.

The constitution states that a governor cannot use his line-item veto power to wipe out a provision in the budget without also wiping out the underlying spending item attached to it. The problem was that lawmakers spread the pay cut throughout the budget and did not put it in one place. Crist told reporters on Wednesday that he had ordered agency heads to enact other spending cuts to offset the $30 million that would have been saved by the pay cut. Crist said he had talked to legal counsel who assured him that what he was doing is legal.

But in a famous case from 1980, Brown v. Firestone, the state high court ruled: "Veto power is intended to be a negative power, the power to nullify, or at least suspend, legislative intent. It is not designed to alter, or amend legislative intent."

Senate budget chief J.D. Alexander told the N.Y. Times Regional Newspapers bureau in Tallahassee that he thought the move was clearly "unconstitutional." But other top lawmakers, including Senate President Jeff Atwater, saw little value in challenging Crist's decision.

Rep. Ellyn Bogdanoff, R-Fort Lauderdale, put it bluntly: "Politically, who's going to challenge him?"

It is worth noting, however, that not everyone in the House was quick to rule it out. Rep. Marcelo Llorente, R-Miami, and one of the two House budget chiefs said the decision will likely be reviewed by the House. Jill Chamberlin, a spokeswoman for House Speaker Larry Cretul, said that Cretul would review the veto next week with staff.

Another X factor: While a case against Crist filed by the House or Senate would generate more attention, there is nothing to stop a individual lawmaker from also filing a lawsuit. There are some who interpret previous rulings from the state Supreme Court to say that there is a wide latitude for any "taxpayer" to challenge the way the budget is handled by the governor.

Another way to handle it of course is to have lawmakers override a Crist veto by a 2/3 vote, but the likelihood of that scenario is very dim. Plus legislators are not officially scheduled to be back in Tallahassee until next year - even though Atwater says there is a possibility of a special session this fall to ratify a compact with the Seminole Tribe of Florida or deal with even more budget cuts if the economy does not rebound.

Crist knocks down contracting bill with late-night veto

Here's a story I did last night for News Service of Florida:

Gov. Charlie Crist vetoed a state contracting bill on Wednesday evening, saying that it “injects unnecessary uncertainty” into contracting because it requires certain contracts to be approved by state lawmakers.

The contracting bill was a top priority of Sen. J.D. Alexander, R-Lake Wales and Senate budget chief, who said the executive branch has let “contracts run amok” in recent years, including several of the privatization deals approved by former Gov. Jeb Bush.

But Crist – who earlier this week defended the work done by state agencies in handling contracts – said in a two-page veto letter that he was concerned that the requirements of the bill (SB 2694) would impose additional costs onto state government at a time that it can’t afford the extra expenses.

“I understand and appreciate that the legislative branch has concerns with some specific contracts that have been in place for several years,’’ wrote Crist. “…I am concerned that this bill imposes additional contracting requirements on state agencies and those who do business with the state at a time when we should be doing everything we can to streamline bureaucracy and stimulate economic growth.’’

The legislation required state lawmakers to sign off on any contract that requires leases or lease-purchases of equipment which cost more than $500,000 and the period of the lease exceeded one year. It also required lawmakers to approve contract that require the state to make payments in future years as part of a deal to lower the cost at the start.

Other provisions in the bill also required the state to give 30 days notice before approving contracts that cost more than $10 million a year or if the contract required little or no payment by the state. That last provision was aimed at contracts such as one the Department of Corrections signed several years ago with a private company to provide prison commissary services. Former DOC Secretary Jim Crosby wound up going to jail after he pled guilty to accepting kickbacks from a subcontractor with the vendor.

Alexander pushed the contracting bill while grappling with the state’s $6 billion budget shortfall this year. Lawmakers were upset about past contracts that have cost the state tens of millions of dollars, or required the state to keep making payments even if the state had to cut its overall budget.

During this past session, Alexander’s own committee heard a presentation that estimated that more than $200 million had been spent on technology contracts that did not work as initially promised. One of the most expensive was Project ASPIRE, an ambitious attempt to put in a new financial reporting and accounting system for the state. The project was started in August 2003 but was suspended by Chief Financial Officer Alex Sink in May 2007 after the state had spent $104 million.

Sink herself said on Wednesday that she was not opposed to the bill, saying “there have been abuses on contracting.’’

But others urged Crist to veto the bill. Associated Industries of Florida, a statewide business group, last week sent a letter to Crist asking him to kill it. Barney Bishop, president and CEO of AIF, said that the legislation was like “killing a mosquito with a sledgehammer.” His organization contended that the bill would “make doing business in Florida virtually impossible’’ and that handing over additional control to lawmakers to approve state contracts would bog down and impede attempts by the state to move quickly on purchasing services.

The Department of Management Services, which oversees contracts and reports to Crist, also warned in an analysis that the legislation could “unintentionally add significant costs and delays” to the contracting process.
 

Crist on Wednesday did sign two separate pieces of legislation also pushed by Alexander. One would require the state to create a database of all real estate holdings and immediately sell off several buildings in downtown Tallahassee. Another bill would call for the creation of the “Transparency Florida” website that would make it easier for citizens and legislators to track state spending included in the state budget.

Will Crist risk a court challenge over budget veto?

Here's the problem:

Can Gov. Charlie Crist legally veto the proposed pay cut for state workers making more than $45,000?

When Crist signs the budget into law later today, there are a lot of people who are hoping that the governor will find a way to nix the pay cut for state employees that is expected to save an estimated $30 million.

Sen. Democratic Leader Al Lawson wrote a lengthy letter to Crist earlier this month saying it would add "insult to injury" if the salaries of state workers were cut since they have not gotten an across-the-board raise for the last three years. The state worker's union also wants a veto as does Supreme Court Chief Justice Peggy Quince.

But the entire issue could wind up before Quince. That's because there's no simple way to wipe out the pay hike. It is contained in so-called proviso language at the back of the 408-page budget. It is not attached to any one appropriation. And that's the problem.

Article III, Section 8 of the Florida Constitution states: "The governor....may not veto any qualification or restriction without also vetoing the appropriation to which it relates."

Lawmakers spread the effect of the pay cut - which was a strong priority of House Republicans - all through the budget. If Crist goes ahead and signs the budget, yet uses his line-item veto power to wipe out the proviso there is a very real risk that his fellow Republicans will waste little time in filing a lawsuit to challenge his authority. The Legislature could probably take the case directly to the state Supreme Court.

Would newly minted U.S. Senate candidate Crist want to go to court to protect state workers? Politically speaking this is an issue that will only garner votes in key places such as Leon County - which is traditionally a Democratic stronghold. It won't help Crist in a Republican primary against former House Speaker Marco Rubio.

But beyond that such a court battle could continue to fray the fragile relationship that Crist already has with state lawmakers and set the stage for an ugly lame-duck session in 2010. To some Republicans the only reason they could vote for a $1 a pack cigarette tax hike and a host of other fees was that they also cut government at the same time.

Charlie Crist's big week ahead

Coming out of the Memorial Day weekend, Gov. Charlie Crist has a desk full of legislation that he must act upon by May 30, or this coming Saturday.

The bills now sitting on Crist's desk include several of the biggest and most important pieces of legislation passed - including the $66.5 billion budget. But they affect everything from workers' compensation insurance, to higher education, to cigarette taxes and Florida's fragile property insurance market.

In the run up to this date, Crist has been asked by the trial lawyers, Republican and Democratic lawmakers, state employees, the NRA to use his veto power to kill bills or slice out parts of the budget that they dislike.

Crist can sign, veto, or allow to become without law any piece of legislation that comes to his desk. Here's a guess on what he will do in the week ahead.

Will immigration factor into the 2010 Senate race?

Former House Speaker Marco Rubio has charged into the 2010 Senate race against Gov. Charlie Crist and made it clear that he wants to "debate" what it means to be a Republican. He has already faulted Crist for his support of the federal stimulus pushed by President Barack Obama and said the election is a "crossroads" for the GOP.

But one underlying question is whether the battle for the soul of the Republican Party will focus at all on the contentious issue of immigration. U.S. Sen. Mel Martinez, the Cuban American whose seat Crist and Rubio want to fill, came under a barrage of criticism for his support of President George Bush's immigration reforms.

Ana Navarro, a Republican consultant who worked for John McCain and is a supporter of Rubio, said she doesn't believe the immigration issue will play that well in Florida. This could be a nod to the fact that Cuban Americans form a significant chunk of Miami-Dade Republicans.

And initially there wasn't going to be much of a policy distinction between Crist and Rubio in the GOP primary because Crist has not sounded off on the immigration issue so much and in the past he defended Martinez's efforts in the U.S. Senate.

Yet it appears that Rubio - whose parents fled from Cuba after dictator Fidel Castro took power - is trying to make sure that he distances himself from some of the policies that got some voters upset with Martinez. He has said several times in the last week that he would have voted against the federal immigration legislation backed by Martinez and the White House.

This is an interesting turn since Rubio has been roundly ripped by some in the blogosphere over what happened during his tenure as House speaker. Several bills that were backed by groups concerned about immigration were killed in the Florida House and never even got voted on. This even prompted a mini-backlash toward Rubio, who was the first Cuban-American to become House speaker. One article at the time even quoted a Miami-Dade lawmaker and ally of Rubio who acknowledged the bills were never a priority for Rubio.

In past speeches, Rubio has talked about how he and other Cuban-Americans can never forget that they are the "sons and daughters of exiles." During his farewell speech as House speaker, Rubio noted how when he was growing up in Las Vegas how neighborhood kids taunted his parents at the time of the Mariel boatlift. He said on the House floor "that's not reflective of America." He also pointed out that America's shining example of democracy was why people wanted to come here.

"When was the last time you read about a boatload of American refugees arriving some other place? Why aren't we building a fence to to keep Americans out of Canada?" Rubio asked.

Consider this statement he made in 2008 during a luncheon hosted by the Cuban American National Foundation: "The constitution says that all people were created equal. Not all people born in the United States but all people in the world."

In 2007, a spokeswoman for Rubio said that the speaker judged an e-mail from then Rep. Don Brown as "inappropriate." Brown's e-mail, which sparked a furor from the Hispanic Caucus, told House members to pay their taxes because "12 million illegal aliens are depending on you."

It could be Rubio has sharpened his position on immigration to try to contrast himself with Crist since the two already clash over the stimulus, taxes, gambling etc. But it remains to be seen whether this issue gains any traction in the weeks and months to come.

Business group wants state contracting bill vetoed

Here's a story that I did for the News Service of Florida on the latest news regarding the state contracting bill.

One of Florida's largest statewide business groups is calling on Gov. Charlie Crist to veto a sweeping bill that would allow state lawmakers to exert more control over contracts with state agencies.

Barney Bishop, president and CEO of the Associated Industries of Florida, said the bill (SB 2694) goes too far in the conditions and restrictions it would place on Crist and Cabinet officials in awarding new state contracts.

"The problem is the language is so expansive, it's like killing a mosquito with a sledgehammer,'' said Bishop.

Sen. J.D. Alexander, R-Lake Wales, and sponsor of the legislation, said he was not surprised AIF was against the legislation.

"They represent a whole lot of folks who would be disadvantaged by it,'' Alexander said. "They couldn't run over there and get sweetheart deals for their buddies."

Alexander, the budget chairman in the Senate, contends the bill is needed to rein in expensive contracts that are difficult to cancel even during tough economic times. Florida lawmakers this past session had to fill a $6 billion budget shortfall.

Alexander said past contracts have cost the state "tens of millions of dollars" and that some of them were multi-year contracts that came with clauses that would put the state on the hook for damages if the contracts were canceled. He cited questionable contracts for either real estate services, or technology upgrades for agencies such as the Department of Financial Services or the Florida Department of Law Enforcement.

"If we don't get a handle on these things, they will proliferate,'' Alexander said.

Can Charlie find a way out? Can he keep the pledge and his promises?

Some alarm bells went off late last week when Gov. and now U.S. Senate candidate Charlie Crist announced that he had signed the famous no-new-taxes pledge offered by the organization fronted by Grover Norquist.

The confusion was understandable: How could Crist reconcile signing the Americans for Tax Reform pledge with his public statements that he would "probably" sign the $1 a pack cigarette tax into law as part of an overall deal on the $66.5 billion state budget?

This confusion was amplified when Crist at a press conference in South Florida said he hadn't decided what to do about the budget yet.

Well, a few interesting points to ponder.

First all, the Senate pledge that Crist signed says he will oppose efforts to increase income tax rates. That means Crist's action on the budget will not break this pledge. No, the problem for Crist is that while running for governor he signed this pledge which states that a person will "oppose and veto any and all efforts to increase taxes."

There is an option other that a veto, although it's unclear how everyone would react to such a move.

Crist could allow the budget - as well as separate bills raising the cigarette tax, motorist and court fees - to all become law without his signature.

Unlike federal law, Florida's governor doesn't have a pocket veto. If the governor fails to act, the measure becomes law 15 days after the bill is presented. (The deadline is 7 days if legislators are in session.) The clock began ticking for the budget and all the budget related bills on Friday, May 15.

Another interesting tidbit: There appears to be nothing in the constitution that says that the governor can't use his line-item budget veto and let a bill still become law without his signature.

That means that Crist could let the budget become law without his signature, yet veto the cigarette tax bill and other spending items included in the budget to offset the potential revenue loss. He allows the motorist and court fee bill to become law without his signature as well and argue that they aren't tax increases.

Of course there's one other scenario: Crist vetoes the budget, vetoes the tax and fee hikes, and calls lawmakers back up to Tallahassee for a special session in late May or early June. But that would be a risky move because Republican lawmakers alienated by such a decision may go as far as overriding his veto by a two-thirds vote. Of course that would get Crist off the hook from the pledge, but it's hard to imagine other top Republicans - such as soon to be Chief Financial Officer candidate Jeff Atwater - to relish such a fight.

McCollum still racking up money in his political fund

While Attorney General Bill McCollum is not expected to announce his bid for governor until next week he has already ramped up fundraising activities associated with his existing political account.

McCollum has raised more than $40,000 for the Building Integrity and Lasting Leadership, or BillFund since March 27. That brings his total for his committee of continuous existence to nearly $123,000 since he first set it up last year.

Donors to the fund since my last update include Newsmax Media, $3,000 from Florida Crystals Corp., several donations from businessman Earle Mack, $3,000 from the David & Sondra Mack Foundation, and $3,000 from private equity investor John K. Castle. In fact, it's worth noting that McCollum's latest wave of donations from people either in the real estate or banking/investment sector.

One other noteworthy transaction: On April 14, the CCE gave a $10,000 check to the Republican Party of Florida.

Taxpayers could pay millions due to wide open 2010 elections

Here's a copy of a story I did for The News Service of Florida:

A wide open race for both governor and three seats on the Cabinet could wind up costing state taxpayers millions next year.

While the Republican-controlled Legislature moved to end what it called "welfare for politicians," state lawmakers refused to pass a bill that would have greatly reduced the amount of taxpayer money spent during the 2010 elections.

The move means that Chief Financial Officer Alex Sink, who declared Wednesday she was running for governor, as well as other potential candidates such as Attorney General Bill McCollum could spend up to $22.6 million on their campaigns and still qualify for taxpayer money.

The Legislature placed on the 2010 ballot a measure that asks voters to kill public financing for statewide campaigns. But the House refused to take up a companion measure passed by the Senate that would have forced candidates for governor to cap their total campaign spending at $7 million in order to qualify for matching money from the state. The legislation would have forced Cabinet candidates to cap spending at $3 million.

Rep. Alan Hays, R-Umatilla, blamed House leadership including House Speaker Larry Cretul, R-Ocala, for the decision to keep the spending limits at their current levels, which is tied to the number of registered voters in Florida. Hays said he does not who objected to the bill, or why it wasn't passed.

"I'm terribly disappointed,'' Hays said. "The decision was made higher up the food chain than me.''

A spokeswoman for Cretul said that the bill had been amended in such a way that it couldn't be resolved before the end of the regular session on May 1. Rep. Bill Galvano, the House rules chairman responsible for controlling what legislation is taken up, said he did not recall why the bill was killed.

"It doesn't ring a bell,'' Galvano said Wednesday.

Florida has had public financing for campaigns for more than 20 years and it was eventually placed in the state constitution by voters in 1998. Florida is one of 16 states that have full or partial public financing of campaigns.

The only major candidate to forgo public matching money was former Gov. Jeb Bush during the three times he ran for governor.

The idea behind public financing was to give public money to those candidates who agreed to limit their overall campaign spending. But legislators in 2005, anticipating an expensive GOP primary between Charlie Crist and Tom Gallagher, increased the amount of money that candidates could spend and remain eligible.

Florida's taxpayers forked over $11 million during the 2006 election, including $3.3 million that went to Crist. Sink accepted a little over $1 million for her successful campaign for chief financial officer, while McCollum received more than $897,000. Agriculture Commissioner Charles Bronson received nearly $394,000.

Under existing law, candidates can receive matching money for contributions they receive after Sept. 1, 2009. Corporate contributions, as well as contributions from out-of-state residents, are not eligible for a match. Candidates can only receive matching money for the first $250 they receive from a donor.

The state begins distributing the matching money 32 days before the primary and every week after that for the duration of the campaign.

As the winds get ready to blow, there's still worries for Florida's backup insurance

On the eve of yet another hurricane season, the Florida Hurricane Catastrophe Fund probably could not cover all of its obligations,the fund advisory council concluded on Tuesday.

The fund is Florida's state-created reinsurance fund intended to provide low-cost backup financing for private carriers and Citizens Property Insurance Corp. Insurance carriers must purchase reinsurance from the Cat Fund in order to write homeowners insurance in Florida.

While the financial outlook for the Fund is a lot better than it was last October, it is estimated that the Cat Fund could probably borrow up to $8 billion in bonds to cover claims, leaving it with a potential shortfall of $11.5 billion to cover all of its obligations. (This is assuming that the Gov. Charlie Crist signs into law a recently-passed bill that whittles backs the size of the Cat Fund's exposure and requires carriers to pay higher costs to support the Fund.

"There is still a significant amount of uncertainty that the Cat Fund would face in the financial markets after a large event,'' said John Forney, the fund's financial advisor from Raymond James & Associates.

Crist, who will probably hear about the latest estimates at Wednesday's meeting with the Cabinet, said he had not heard about the latest Cat Fund estimates when asked on Tuesday. Crist did say that he still plans to sign HB 1495 - which also raises rates for Citizens - into law when it reaches his desk.

The Cat Fund will have $27.5 billion worth of exposure in the coming hurricane season. The potential shortfall would leave the Fund with almost enough to cover all the claims in its so-called mandatory layer - which is the coverage that all carriers must purchase. But this estimate means that the Fund would have difficulty raising money to cover its additional exposure know as the Temporary Increase in Coverage Limit. Carriers are under no obligation to purchase this coverage, but many do, including Citizens, the state's largest property insurance carrier.

But it would take a large storm the size of a Hurricane Andrew or Hurricane Katrina in order to generate the type of claims that would require this size of payout. And the Cat Fund does have an estimated $8 billion already in hand that it could use to pay out claims initially, buying it time before it would need to borrow additional money (including maybe from the federal government if Congress passes a measure authorizing it.)

Forney during his presentation did take a shot at what he called "Cat Fund bashing" on Tuesday, reminding the council that the Cat Fund has done its job of helping provide low-cost reinsurance and that its ability to assess every insurance policy in Florida gives its a way of repaying its debt that still makes it attractive to some in the bond market. The current shortfall is a result of the size of the Fund's exposure and the remaining fallout from last year's meltdown in the financial industry.

Forney said the bill lawmakers passed went a long way to improving the Cat Fund's financial health in the long run.