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Successful Year in Florida Legislature

By Robert Skrob | May 9, 2008

My company, Membership Services, Inc., has 10 clients. Each of these clients is an association. Each association represents a different industry, such as motor cycle dealers, employee leasing companies, household movers or check cashers. This year, 9 of my 10 clients had extensive initiatives to change laws affecting their industry.

To change a law you have to convince a majority of 120 members of the House of Representatives and a majority of the 40 members of the Senate to approve the exact same language. Then you have to get the Governor to approve. All this gets done within one 60 day period between the beginning of March and the first couple of days in May. This year, Session ended on May 2nd, my birthday. It’s present to me was a successful year.

While each of my clients have a lobbyist, it’s my job to coordinate their activities, testify in front of legislators and meet with our opposition to negotiate compromises. Over all, my clients had a successful year in the legislature. While we weren’t 100% successful this year in their initiatives, but none of them lost anything to their opposition.

Here is a copy of a report I created for the Florida Association of Convention and Visitors Bureaus. I serve as the Executive Director of the FACVB. This report will give you an idea of what it’s like to get favorable laws passed and prevent unfavorable ones.

Good Legislative Session for Florida’s Economy

Recognizing that Florida’s tourism industry is the state’s best opportunity to raise revenue for state-funded programs, Florida’s Legislature abandoned the status quo this year. While saying “nothing happened” would normally mean failure, during this session, coming out unharmed was a major victory.

VISIT FLORIDA Funding Allows for State Tourism Advertising

The Legislature has allocated $35.55 million to VISIT FLORIDA for tourism marketing for FY 2008-2009. VISIT FLORIDA considers this a huge success. While the Legislature cut the state’s budget by nearly 10 percent, this appropriation is a 3-percent increase over the $34.5 million VISIT FLORIDA received during last year’s legislative session.

Lawmakers found it difficult to appropriate money for a marketing campaign while reducing funding for education, healthcare and services for people with disabilities. Of course, no other state appropriation can provide the return on investment that the sales tax on purchases made by new visitors to our state will generate; however, legislators did not choose to appropriate the $62 million that the industry had requested or the $45 million in the governor’s budget recommendation.

With the current appropriation, VISIT FLORIDA can buy advertising in major origination markets for Florida. However, with the slowing economy, competition for visitors is growing. Several other U.S. states as well as countries around the world are increasing their tourism advertising budgets. Florida must boost its marketing efforts in the future to continue to attract visitors to the state.

City of Key West Tries to Implement a New Tourism Tax

A few years ago, the city of Destin tried to convince the Legislature that it needed to levy a tax on tourists to ease congestion on highways. As it turned out, even if the tax had been bonded for 10 years, the tax would have paved only one-half mile of road.
This year, the City of Key West came up with its own proposal, a one-penny city tax to create affordable housing for tourism workers. The additional penny tax would have increased tourist taxes in the city by 25 percent and set a dangerous precedent for other areas of Florida to follow.

As a result of the housing bubble, there are fewer condo projects for developers to create; thus, a group of them went to the mayor to locate funding for new projects.
The mayor obliged with a proposal to tax tourists to create affordable housing for residents. While the mayor testified in Tallahassee that this effort was to provide housing for low-paid service and tourism industry employees, we understand that back home he said it was for police officers, firefighters and anyone else who needed lower cost housing on the island. Many in Monroe County opposed this tax.

While the legislative leadership was against all new tax proposals, the mayor found in Rep. Dean Cannon an ally to aggressively support a new tax for the City of Key West (this in spite of Rep. Cannon’s pledge to Americans for Tax Reform to “oppose and vote against any and all efforts to increase taxes”).

Rep. Cannon introduced this proposal in the House Economic Expansion and Infrastructure Council on Friday, April 11. His proposal was buried—five minutes before the committee meeting began—within a 1,000-line amendment. It was only because FACVB lobbyist Fred Martin’s assistant was monitoring the meeting that we ever found out about the language.

The next committee hearing on the Key West issue was the House Policy and Budget Council on Monday, April 14. Several FACVB members made calls and sent emails to council members throughout the morning. Fred and the lobbyists for the Florida Restaurant and Lodging Association met with several members of the committee. We quickly accumulated enough votes to amend the language out of the bill. Rep. Jack Seiler agreed to file the amendment.

However, just prior to the meeting, Rep. Cannon held a private meeting in his office with several members of the committee. After that meeting, council members stopped discussing the Key West tax with us.

During the committee meeting, Rep. Seiler filed an amendment to remove the language from the bill. He stated that this proposal wasn’t properly considered by the affected community, was a new tax and shouldn’t be slipped into the bill.

The mayor of Key West spoke in support of the language. He stated that the Key West City Council had voted in favor of the provision. When asked about the Monroe County Commission, the mayor said that the commission had taken a neutral stance. When asked whether the Monroe County Tourist Development Council supported this provision, he replied that he is a member of the TDC; however, he had missed the last meeting, but didn’t see this issue on the agenda. The mayor testified that this new tax is necessary to provide housing for individuals working within the tourism industry.

FACVB Executive Director Robert Skrob spoke in support of the amendment to remove this Tourist Development Tax expansion from the bill. He pointed out that this is a county ordinance and that the Monroe County Commission as well as the Monroe County Tourist Development Council had, indeed, voted against it. Skrob also testified that the tourism industry, which this law was purported to benefit, was against the bill, including both the Lodging Association of the Florida Keys and Key West and the Key West Innkeepers Association.

In the end, it became clear that Rep. Cannon had swayed the committee. During testimony and questions, several members of the council approached Rep. Seiler and spoke with him. After Skrob testified, the council’s chairman recognized Rep. Seiler, and he withdrew his motion.

During the closing weeks of the legislative session, Key West’s mayor visited Tallahassee many times. Rep. Cannon apparently worked hard to get the language passed; however, Sen. Rudy Garcia, sponsor of the Affordable Housing bill in the Senate, wasn’t supportive of the proposal.

On April 29, the Senate considered its version of the Affordable Housing bill, SB 482. While the House version included the one-penny Key West tax, the Senate bill did not.

During debate on the bill, Sen. Larcenia J. Bullard questioned Sen. Garcia about his legislation, saying, “I have a sheet on my desk that says to vote for a tourist tax for the City of Key West. I understand there are three people for Key West that support this tax, but there are many throughout Monroe County that do not support this tax. I do not support this tax, and I want to know if there are any provisions in your bill that give this tax to the City of Key West.”

Sen. Garcia responded, “This was an issue that was important to the Senate president and many others. However, it was vetted properly, and it isn’t part of this bill.”

Even though Rep. Cannon attempted to amend the Key West tax language onto another bill, he wasn’t able to generate broader support for the issue.

Because our opponents tried an “ambush” tactic to slip in this language, it will be difficult to attempt the tactic again next year. If it’s introduced early, it will have to be debated on its merits. As a new tax, it will be difficult for many of the legislators to support it.

Internet Retailers Fail to Create a Sales Tax Exemption on Hotel Room Markups

In 2004, the Senate Finance and Tax Committee published a detailed study of the way Internet retailers mark up and sell hotel rooms. The opinion expressed by the committee was that Florida should collect tax on the total amount the guest pays to stay in the room.

Lobbyists for Internet companies describe this as a “tax on services.” Services taxes strike fear into the hearts of legislators, who recognize the fiasco created in 1990 when the state applied sales taxes to services. So, anytime the term “taxes on services” is used in the Capitol, lawmakers are predisposed to vote against it.

In 2005 and 2006, with the assistance of the FACVB, several bills were filed to clarify that Internet retailers should collect and remit taxes on the total amount the consumer pays. In addition, those bills included details that would ease the administrative burden for the Internet retailers. For three years, these good bills got mired in the details. County tax collectors couldn’t agree to a streamlined statewide collection system.

Meanwhile, several cities and counties in Florida, along with other major U.S. cities, filed lawsuits against Internet retailers to collect taxes due. They discovered that their tax ordinances and collection mechanisms are designed to investigate and collect taxes from businesses registered within their territorial limits. While the taxes are clearly due under the Florida Tourist Development Tax law, the collection laws make it difficult for counties to prosecute out-of-state companies. Some of the lawsuits have been dismissed because attorneys for Internet companies cite collection technicalities. To date, no judge has opined on the taxability of these transactions. Meanwhile, counties are revising their collection laws.

On March 26, we discovered that the Department of Revenue (DOR) had drafted a bill at the request of the Senate Finance and Tax Committee chairman, Sen. Mike Haridopolos, to create an exemption from the state sales tax and the county Tourist Development Tax for Internet retailers. During debate on the bill, the senator demonstrated a clear conviction for his proposal. He positioned this bill as a “clarification” of current law. DOR Executive Director Lisa Echeverri testified that the sales tax law is unclear and said the DOR would like clarification from the Legislature.

A lobbyist and an attorney spoke for the bill on behalf of Expedia.com, and lobbyists for other Internet companies were in attendance.

Eloquently speaking against the bill was Commissioner Ilene Lieberman from Broward County, District 1. In addition, FACVB Executive Director Robert Skrob spoke against the bill and fielded several questions from Sen. Haridopolos. Fred Martin, FACVB lobbyist, was recognized to speak, but yielded his time to Skrob to answer a couple of specific questions posed by the committee.

While Sen. Haridopolos positioned his bill as a “clarification,” both Commissioner Lieberman and Skrob testified that this is a tax rollback and an exemption.

Two other provisions within the bill dealt with taxes on timeshares. One concerned taxes on preview visits for timeshare sales and the other the taxability of timeshare exchanges. These provisions were amended onto the bill and passed.

The bill passed out of the Senate Finance and Tax Committee a week later. (Typically, no one on a committee votes against a bill sponsored by the committee’s chairperson.)

On April 16, the House Government Efficiency and Accountability Council took the unusual step of passing the Internet Retailer Exemption bill without public testimony. The council was scheduled to end its meeting at 10:30 a.m. After hearing a number of bills, time was running out, so the council extended the meeting by 15 minutes to 10:45 a.m.

At about 10:31 a.m., the council members began discussing proposed committee bill GEAC20. This bill had a number of provisions, one of which was the Internet tax exemption. Before time expired and the committee lost the opportunity to vote on the bill, Rep. Franklin Sands called the question. The motion was approved, and the bill passed on a roll call vote. The meeting was then immediately adjourned.

Unfortunately, there was never an opportunity for public testimony on this bill. The council did not hear opposing views or receive additional input from the public, despite several representatives of Internet retailers and three lobbying firms working to get this bill passed into law.

With the chairpersons of committees in both the House and the Senate as sponsors of their bill, the Internet retailers were well positioned to succeed. On several occasions, the representatives of the Internet retailers told us that because of the legislation’s sponsors, their proposal was certain to pass. They said that by fighting against it, we made ourselves look foolish since everyone in leadership had already made their decisions. When we explained that the bills came out of committee without any discussions with the sponsors, the Internet companies’ lobbyists told us that it was because we were ineffective advocates for our industry.

We believe Internet companies used dubious facts to advocate their position. Of course, there is the “services tax” argument. In addition, the Internet companies did not disclose the fact that the Florida attorney general is investigating their pricing practices. They were clever with their explanations of how their pricing works and pretended that their websites’ terms of use explain their tax collections to customers, even though that’s in conflict with Florida law. Moreover, whenever we tried to explain the true facts behind their claims, they told legislators and their staffs that we were not being truthful or just did not “understand.”

As the session began to wind down, the FACVB and lobbyists representing Florida counties continued to work against the Internet tax exemption. Several Florida newspapers published stories criticizing this proposal, which would have exempted Internet retailers from paying Tourist Development Taxes on their markups. We understand that several counties throughout Florida are continuing or still pursuing their suits against these Internet companies to collect the taxes due. This proposal would have allowed these Internet companies to get out of the lawsuits without remitting the taxes due on these transactions.

For several days, there were rumors about bills getting amended with this Internet retailer language. On two occasions, Rep. Frank Attkisson tried to bring this language to the House floor. He was unsuccessful both times.

In the end, the Internet retailer exemption was not passed into law, so the FACVB’s efforts were not futile.

We plan on working with the new committee chairpersons next year to proactively explain the law and to ask for their support. If nothing else, the Legislature should allow the attorney general’s investigations and the counties’ lawsuits to run their courses, or strengthen the enforcement power of the DOR or the counties to collect the taxes due under current law.

A Coalition of Florida Counties Attempt to Pass an Additional Rental Car Surcharge

The Senate Transportation and Economic Development Appropriations Committee met on April 22 and adopted several amendments to CS/SB 1978 and CS/HB 1245, Regional Transportation Authorities, including an amendment by Sen. Dan Webster that proposed adding an additional $2 surcharge to rental cars in counties that have international airports and in which county voters approve the surcharge by referendum.

The intent of this amendment was to use the new tax revenue for regional transportation projects, including the Central Florida CSX rail project. FACVB lobbyist Fred Martin spoke against the amendment in the committee meeting, and also, prior to the meeting, he had urged committee members not to adopt this “new tax.” Unfortunately, Sen. Webster, a member of the committee, prevailed on his amendment, and the bill was reported favorably. We were surprised to learn a couple of days later that the bill had been recommitted to the Senate Transportation and Economic Development Appropriations Committee for another hearing. It was heard by that committee for the second time on April 24, at which time several additional amendments were added to the bill, none of which readdressed the rental car surcharge issue.

On the last day of session, the Senate president gave his permission to several legislators to amend the surcharge onto SB 682, sponsored by Sen. Larcenia J. Bullard. Sen. Bullard didn’t agree with the amendments, and she stood up to the Senate president, telling him she wasn’t going to support them. When Sen. Bullard refused to relent, the Senate president adjourned the chamber for a private meeting with Sen. Bullard. During the meeting, Sen. Bullard prevailed, and the bill passed without the rental car surcharge being included. Later, an amendment proposing a $2 surcharge statewide on rental cars was offered by Sen. Geller on CS/SB 862, but it was defeated.

Legislator Becomes Frustrated With Tax Exemption for Super Bowl Tickets

On April 30, the Senate passed an amendment to CS/HB 1059 with language that would have eliminated the sales tax exemption on Super Bowl tickets. This amendment was offered by Sen. Mike Haridopolos (“no new taxes”), who said it was more than justified because the NFL has plenty of money. The State of Florida had created the exemption as part of its deal with the NFL to attract more revenue-producing Super Bowls to Florida. Super Bowls have had a huge economic impact on our state. If this provision had passed, it could have led to the loss of at least one Super Bowl, resulting in millions of dollars in lost sales tax revenue.

County lobbyists and FACVB lobbyist Fred Martin made several visits to legislators on May 1 and 2. When the House took up the bill, it refused to concur with Sen. Haridopolos’s Super Bowl tax amendment. The Senate approved the House bill without the sales tax on Super Bowl tickets, so this new tax proposal died.

The Time Is Now to Prepare for 2009 Legislative Session

There are fewer than 299 days before the 2009 legislative session begins. Legislators do not yet understand the importance of Florida’s and our counties’ tourism marketing efforts. They will each nod in acknowledgement of the money generated by the industry without understanding the extent to which tourism marketing efforts generate those sales tax receipts. We have a challenge ahead of us to help educate legislators on the importance of tourism to the state.

Topics: Skrob Family | 1 Comment »

One Response to “Successful Year in Florida Legislature”

  1. Evdokia Says:
    November 5th, 2008 at 11:44 PM

    good article

Comments