Amber Hughes Florida 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 Pensions CS/CS/SB 458 (Ring) CS/HB 1399 (Rooney)  Not Pension Reform—did not allow cities to negotiate benefit levels below  Would have repealed “Naples Letter” language and thus sunset existing agreements relying on Naples letter.

State Pension SB 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: ClassNew Normal RateOld Normal Rate Regular3.53%3.55% Special Risk11%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 Management4.81%4.84% DROP % SFY 2014 FRS Rates

ClassNew 2013 UAL RateOld 2013 UAL Rate2012 UAL Rate Regular2.19%2.02%0.49% Special Risk6.83%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 Management12.27%11.25%0.32% DROP7.01%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,  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 Court SB 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 Tax CS/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 CCNA SB 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.)

SFY 2014 Budget Biggest Winner = General Government - $4.4 B; up 16.54% Biggest Loser = Judicial Branch - $443 M; up 0.28%

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 Associations Florida Association of Counties ( Florida League of Cities ( Florida School Boards Association ( State and Legislative My Florida ( Online Sunshine ( Office of Economic & Demographic Research ( News & Events Sayfie Review ( The News Service of Florida ( Florida Channel (

Questions and Contact Information Amber M. Hughes Legislative Advocate Florida League of Cities