State leaders limited in ways to create jobs but 'heat is on'

Staggering unemployment during an election year means the pressure on state leaders to spur job growth couldn't be greater.

"If I wasn't already on blood pressure medicine, I would be now," said Pensacola Rep. Dave Murzin, chairman of the House Economic Development & Community Affairs Policy Council. "The heat is on."

But economic experts say the state has limited tools for attacking the problem, and that the high cost of some of those options - such as tax cuts for business - may outweigh the benefits, given the state's shrunken coffers. Florida expects $2 billion in revenue growth next year, but costs of critical services are expected to outpace that, creating a budget hole as large as $3 billion.

Florida's best hope for job growth, some experts say, is to improve its business climate by easing regulation and minimizing bureaucratic processes that some say slow business development. But it's unlikely to produce a quick windfall of jobs, and direct results will be hard to quantify. Aggressive deregulation could also spur a backlash of criticism from consumer and environmental advocates, fearing that the state will leave communities and resources unprotected.

All in all, attempting to legislate economic growth is a tough proposition, and one that has not always worked well in Florida. But faced with more than 1 million residents out of work, state leaders who fail to react do so at their political peril.

Daniel Smith, a political science professor at the University of Florida, thinks that reaction during the legislative session that starts March 2 will be "much too little, much too late."

"Florida has not been very creative about changing its economic infrastructure," he said, noting that states such as Massachusetts have invested more in higher education and infrastructure to lure new industry and higher-paying jobs.

"I really don't see much innovative thinking here," Smith said. "It's all going to be about tax breaks. We're stuck in a tax-cutting paradigm."

More than ever, lawmakers will feel pressured to give the business community whatever it demands, he said. "The chamber of commerce calls the tune."

Murzin, a Republican leading the House jobs initiative, disagreed. "We don't have the money to write a blank check. I think, now more than ever, we're cautiously approaching to determine what can work, and what doesn't work."

For example, he said, there may be a more direct, provable economic payoff from investing heavily in the state's ports than, say, marketing the state to tourists.

"I understand how important things like tourism are in Florida," Murzin said. "But in a down economy, should we increase marketing about Florida, in hopes that people will come here and spend money, when they're losing their jobs?"

Given the predicted budget shortfall, lawmakers will face tough choices on how much to spend, and where, he said. Film industry tax breaks, for example, will put people to work, he said, but lawmakers will have to decide how much they are willing to take from another part of the budget to pay for them.

Temptation of tax breaks

Tax breaks and related incentives are a major component of proposals pouring out of the Legislature and governor's office. Gov. Charlie Crist wants to give businesses a $10,000 tax credit on their first $1 million in profits. He also wants to restore the state's sales tax holiday on back to school supplies. Implementing both plans would cost the state more than $100 million in tax revenue.

Senate lawmakers are crafting an expansive jobs bill that includes a variety of tax incentives, including:

• Capping sales tax on yachts and airplanes.

• Creating a $1,000-per-job corporate tax credit for hiring someone who has been jobless for at least 26 weeks.

• Extending an existing sales tax exemption on machinery and equipment to more manufacturing and spaceport businesses.

• Expanding eligibility for a tax credit for creating high-paying jobs.

Many of the Senate's ideas are based on successful initiatives in other states, said Sen. Don Gaetz, chairman of the committee proposing the bill. He has not yet provided a total for how much it would cost the state, though other lawmakers' estimates range from $150 million to $300 million.

Gaetz, R-Niceville, defended his spending priority. "If we don't take action and help create jobs, there will be less and less revenue. We can't just squabble about smaller and smaller pieces of a shrinking pie."

Barriers to a boost

Murzin, who has a political beef with Gaetz over the latter's endorsement of Murzin's rival for a state Senate seat, recently criticized the Senate's jobs package as being too expensive, and its architect as being more concerned about good press than good policy.

Though Murzin said he meant "nothing personal" by it, the dust-up between the two committee chairmen could complicate lawmakers' efforts to pass a jobs package. Both lawmakers have denied that politics will stand in the way.

Many of the proposed tax breaks wouldn't help AAA Services, a remodeling construction business owned by Joe and Doris Logar of Largo.

Since 2006, the couple have downsized their company from 27 employees to seven. They sold the office building they bought less than four years ago. Today, they work out of their home.

"For every 10 estimates we're giving, we may get three jobs," Joe Logar said. "Three or four years ago, we'd give 10 estimates and get eight of those jobs."

Their company's profit isn't high enough to trigger the proposed $10,000 corporate income tax cut, and hiring incentives may not offset enough of the cost for the Logars to take advantage of them. But the couple said they're glad anyway to see state leaders trying to provide relief.

"Anything that makes it cheaper for companies to do business helps," Joe Logar said.

Fighting for a long-term fix

State leaders view tax breaks as a "quick fix" to invigorate the economy, said Denny Dennis, a senior research fellow based in Washington for the National Federation of Independent Business. But states such as Florida have a constitutional obligation to balance their budgets, so they can't borrow or spend their way out of a bad economy, especially when revenue is tight.

"They want it done tomorrow," Dennis said. "I would love to have it done tomorrow, too. But most of the things that are really helpful are longer term."

That means, he said, easing tough regulations - an approach that appeals to this year's lead candidates for governor.

Republican gubernatorial candidate Bill McCollum said that in his experience while a member of Congress, targeted tax credits were "minimally effective."

"I think all of us want and wish we had a simple solution," said McCollum, now state attorney general. "We can't just magically create those jobs. But we can build the base for bringing those jobs back here."

Florida, he said, must diversify its economy so that it relies less on tourism and agriculture. But accomplishing that means keeping tax rates low and rules for businesses "simplified and streamlined."

State Sen. Paula Dockery, a GOP gubernatorial candidate from Lakeland with Tea Party activist support, called this week for the creation of a new "red tape" commission charged exclusively with eliminating what she called "burdensome, outdated" regulations.

She recounted the story of a Lake County trucking company. Dockery said one of the owners told her that a state inspector had recently stopped their driver to "search for something to ticket them with. All he came up with was a cracked reflector, gave them a hefty fine and kept them from being on the road for over an hour. Regulation has its place, but it has to make common sense."

Deregulation has long been a clarion call among Republicans. But even state Chief Financial Officer Alex Sink, lead Democrat running for governor, has called for expedited environmental permitting of business projects. "Because with every delay of a day, that's somebody who doesn't have a job - and who will get one, if we act faster."

Streamlining plan

The Senate's jobs package includes several deregulatory proposals, including:

• Eliminating a layer of scrutiny for environmental permitting at either the state or local level.

• Further extending permits for development projects by three years, on top of the two-year extension granted last spring.

• Forcing state agencies to decide whether to grant business permits within 30 days. After that, the permit would be deemed approved unless the agency could make a strong case against it.

The House is taking up similar proposals, Murzin said. "This downturn has made us realize that government is standing in the way of business."

Denise Layne, executive director of the Tampa Bay area Coalition 4 Responsible Growth, was outraged, particularly about the call for quicker permitting. State agencies already are trying to do more with fewer resources, she said, calling the 30-day permitting window an "insane" proposal.

"They physically won't be able to do it," Layne said. "That's just automatic permitting approval."

It will also cut concerned citizens out of the process, she said, calling it a gift to special industry interests and "a sleazy way to go about streamlining."

Crist said he would "advise caution" about streamlining environmental permitting, warning that acting too aggressively could harm Florida's most precious - and marketable - natural resources.

But Stefan Norrbin, a Florida State University economics professor, said streamlining regulations could spur job growth in the long-run.

"When we're comparing what is happening now (with streamlining) in Georgia, Alabama and South Carolina, most of those things have already happened," said Norrbin, chief economist for the business-backed Florida TaxWatch. "That means we're at a disadvantage."

OTHER IDEAS ON CREATING JOBS

A bill to delay a statutorily required, dramatic increase this spring in the unemployment compensation tax on businesses could pass as soon as the first week of March.

Some Democrats want the state to accept $444 million in federal stimulus money, which is only available to states that modernize the unemployment compensation system to provide benefits quicker. Republicans insist that would cost more. Their bill, they say, would keep businesses in the black and employees at work.

Other jobs-related ideas include:

• Awarding $250,000 matching grants to startups and other small companies trying to enter the high-tech marketplace. (In Senate jobs bill)

• Stimulating portside business growth and employment through tax credits. (From Democratic Sen. Jeremy Ring of Margate and Republican Rep. Lake Ray of Jacksonville)

• Allocating $6.8 million for communities to invest in programs that assist small businesses and entrepreneurs. (In governor's budget proposal)

• Creating a program that puts unemployed construction workers to work maintaining or renovating homes in foreclosure. Banks that pay into the program would likely receive a tax credit. (Proposal in the works from Republican Sen. Paula Dockery of Lakeland)

BY THE NUMBERS

12.4%

Unemployment rate in Tampa Bay area

11.8%

Unemployment rate statewide

9.7%

Unemployment rate nationwide

1.1 million

Number of Floridians without jobs

750,000

Jobs lost statewide since March 2007

2015

Year job growth is predicted to return to pre-recession norms

Note: Unemployment statistics, the most recent available, are for December

Sources: State Agency for Workforce Innovation, Office of Economic and Demographic Research