Amber HughesFlorida League of Cities

June 25, 2013

FGFOA 2013 Legislative Update

Overview

Review of 2013 FGFOA Priorities

Additional 2013 Legislative Highlights

SFY 2014 Budget

2014 Preparation and Outlook

Additional Resources and Information

Review of 2013 FGFOA Priorities

Pension Reform Property Tax Reform Communication Services Tax Local Business Tax September 30 Fiscal Year-End for Clerk of Circuit Court

Remittances to State and County Streamline Clerk of Circuit Court Funding/Budgeting

Process Sales Tax on Internet Transaction Bed Tax on Internet Sales of Lodging Allowing Price in the Consultants Competitive Negotiation

Act Public Personnel Records

Local Government Pensions CS/CS/CS/SB 534 (Brandes)

Creates reporting standards for publicly funded defined benefit retirement plans.

State is not responsible for shortfalls in local gov’t retirement systems/plans.

Requires each defined benefit plan to submit report to FL DMS.

Report must include financial statements using: – plan’s assumed rate of return and– rate of return 200 basis points lower than

assumed rate of return

Implementation was extended to June 30, 2014.

Local Government PensionsCS/CS/SB 458 (Ring)

CS/HB 1399 (Rooney)

Not Pension Reform—did not allow cities to negotiate benefit levels below 1999.

Would have repealed “Naples Letter” language and thus sunset existing agreements relying on Naples letter.

State PensionSB 1810 (Govt. Oversight & Accountability)

Sets the employer-paid contribution rates for the FRS and the Retiree Health Insurance Subsidy program.

The employer-paid contribution for the HIS program is increased from 1.11% of the employer’s payroll to 1.20% of the employer’s payroll. These funds will be deposited into the Retiree HIS Trust Fund to pay benefits to participating retirees.

These provisions take effect July 1, 2013.

FRS Contribution Rates (SB 1810): Modifies employer contribution rates. Employer normal contribution rates for each membership class of FRS (Defined Benefit and Defined Investment) are amended as follows:

Class New Normal Rate Old Normal Rate

Regular 3.53% 3.55%

Special Risk 11% 11.01%

Special Risk Administrative Support

4.17% 3.94%

Elected Officers (legislators) 6.52% 6.51%

Elected Officers (judges) 10.05% 10.02%

Elected Officers (county officers) 8.44% 8.36%

Senior Management 4.81% 4.84%

DROP 4.63 4.33%

SFY 2014 FRS Rates

SFY 2014 FRS Rates

Class New 2013 UAL Rate Old 2013 UAL Rate 2012 UAL Rate

Regular 2.19% 2.02% 0.49%

Special Risk 6.83% 7.03% 2.75%

Special Risk Administrative Support

30.56% 27.04% 0.83%

Elected Officers (legislators)

24.85% 27.18% 0.88%

Elected Officers (judges) 17.00% 16.38% 0.77%

Elected Officers (county officers)

23.36% 23.01% 0.73%

Senior Management 12.27% 11.25% 0.32%

DROP 7.01% 6.21% 0.00%

To address unfunded actuarial liabilities (UAL) of the system, the bill amends the current 2013 employer contribution rates for each membership class of FRS as follows:

FRS Reform CS/CS/SB 1392 (Simpson)

CS/CS/HB 7001 (Gov. Ops. Subcommittee)

Senate Proposal: Would have changed default for members who do not

affirmatively choose a plan from DB to DC. Would have changed vesting from 8 to 10 years. Would have mandated Elected and SMS class join DC Plans. Would have lowered DC plan contribution rates from 3 to 2%.

House Plan: Would have closed DB plan to new members as of Jan. 1, 2014. Would have provided additional death benefit for special rick. Would have expanded investment options.

Communications Services Tax

House Finance and Taxation committee considered concepts to broaden the tax base replace the local CST with state CST.

No legislation was filed with these specific concepts.

Communications Services Tax HB 303 (Grant)/SB 1422 (Richter)

Would have repealed local CST and revised state CST rate to be 10.65%

Would give 45% of the state CST to the local governments- but no distribution formula.

Would have required local gov’t. to reduce ad valorem rate to offset increased CST revenues.

Local Business Tax HB 7109 (F&T Subcommittee)

Would have created three LBT classifications based upon sq. footage of the business.

Established parameters for rate structure and required the city to adopt the rate structure by a 2/3 vote.

Eliminated “overlap” between cities and counties.

Clerks of the CourtSB 1512 (Appropriations)

Reverses many of the changes made in SB 2108 during 2009 relating to the budgets of the clerks of court.

Expands the role of the LBC by creating oversight and accountability in the clerks’ budget process.

Internet Sales TaxCS/SB 316 (Detert)

HB 7097 (F&T Subcommittee)

Would have created two new situations where out-of-state retailers that conduct business over the internet would be required to collect and remit Florida sales tax on sales made to Florida residents.

Would have required the Revenue Estimating Conference to calculate the amount of additional sales tax that is remitted from out-of-state retailers.

Bed Tax on Internet Sales

No Legislation filed dealing with the TDT and internet sales.

Stakeholders are waiting on the Florida Supreme Court.

Allowing Price in CCNASB 1002 (Soto)/ HB 739 (Metz)

Would have allowed agencies to use a best value selection process, which creates a two-stage procurement process, for architectural, engineering, landscape architectural, or surveying and mapping services.

Public Personnel Records

No Legislation filed dealing with public records exemptions for all public employees.

• CS/HB 731 (Kerner) creates a public records exemption for the names of spouses and children of state attorneys and law enforcement personnel.

Additional Legislative Highlights that Passed

Medicaid Reimbursement Ethics and Elections Economic Development Red Light Cameras Mortgage Foreclosures / Liens Natural Gas Motor Fuel Transparency

Additional Legislative Highlights that Failed

Sovereign Immunity E911 Fee Campus Development Agreements Stormwater Fees Value Adjustment Boards Sales Tax Exemption on Commercial

Leases

SFY 2014 Budget SB 1500 Approximately $74.1 billion, and represents a $4.9

billion increase from the previous state fiscal year. General Revenue: $26.7 Billion (approx.) Trust Fund Revenue: $47.5 Billion (approx.)

Budget Comparison (In Millions) GAA Final $ Difference % Difference

SFY 2013 SFY 2014 SFY 13 vs. SFY 14 SFY 13 vs. SFY 14

Section 1. Education 1,606.90 1,609.50 2.60 0.16% Section 2. Education 18,867.80 20,342.26 1,474.46 7.81% Section 3. Health and Human Services 29,790.90 31,071.97 1,281.07 4.30% Section 4. Criminal Justice and Corrections 3,746.20 3,827.55 81.35 2.17% Section 5. Environment & Transportation 10,970.00 12,432.73 1,462.73 13.33% Section 6. General Government 3,775.60 4,400.21 624.61 16.54% Section 7. Judicial Branch 442.20 443.43 1.23 0.28% Total Budget 69,199.60 74,127.64 4,928.04 7.12%

SFY 2014 Budget

Biggest Winner = General Government - $4.4 B; up 16.54%Biggest Loser = Judicial Branch - $443 M; up 0.28%

Education29.61%

Health and Human Services41.92%

Criminal Justice and Corrections

5.16%

Environment / Transportation

16.77%

General Government5.94% Judicial Branch

.6%

2014 Outlook

Communication Services Tax Local Business Tax Pension Reform Property Taxes E-911 Fees Stormwater Value Adjustment Boards Sales Tax Exemption on Commercial

Leases

Additional Resources and Information

AssociationsFlorida Association of Counties (www.fl-counties.com)Florida League of Cities (www.flcities.com)Florida School Boards Association (www.fsba.com)

State and LegislativeMy Florida (www.myflorida.com)Online Sunshine (www.leg.state.fl.us)Office of Economic & Demographic Research (http://edr.state.fl.us)

News & EventsSayfie Review (www.sayfiereview.com)The News Service of Florida (http://www.newsserviceflorida.com)Florida Channel (http://wfsu.org/tfc)

Questions and Contact Information

Amber M. HughesLegislative Advocate

Florida League of CitiesAHughes@flcities.com

850.222.3806