Weatherford: I'm 'highly concerned' about $52 million Heritage insurance deal

The list of lawmakers criticizing Citizens Property Insurance Corp. for a $52 million takeout deal continues to grow, as House Speaker Will Weatherford said Friday that he had "serious concerns" about the plan.

Weatherford, R-Wesley Chapel, said Citizens did not provide sufficient notice to the Legislature before quickly approving the $52 million deal that was unveiled and voted on this week.

"I have serious concerns about the latest takeout agreement between Citizens and the Heritage Property and Casualty Insurance Company, particularly the lengthy backdated payments for coverage that Heritage did not provide," Weatherford said in a statment. "Once again, Citizens did not provide a sufficient advanced briefing to the Legislature, and the proposal was hastily pushed through a sharply divided board."

Last year, Weatherford chided Citizens for attempting to loan out up to $250 million from its cash surplus to smaller private insurance companies. Citizens eventually abandoned the effort, but decided to go ahead with plans to pay companies cash for taking over policies in a unique retroactive reinsurance agreement.

Weatherford joins Rep. Mike Fasano (R-New Port Richey), Gov. Rick Scott,  Rep. Frank Artiles (R-Miami) and former state senator Dan Gelber (D-Miami Beach) in slamming Citizens for the deal. 

Weatherford said the deal, which passed on a 3-2 vote less than a week after it was unveiled, was "hastily pushed through a sharply divided board."

Citizens has defended the deal, calling it a "compelling" opportunity to shed more than $400 million in risk, should a one-in-100-year storm hit the state.  

Still, the company has drawn criticism from state lawmakers who say they were not informed about the deal. Weatherford said that the Legislature passed a "comprehensive insurance bill" earlier this month that would help Citizens shed policies without giving companies cash incentives.

His statement goes on to blast Citizens about "their lack of understanding that Citizens has a greater responsibility to the public."

See Citizens' full statement on the deal here. 

“This is a great opportunity to place another 60,000 policies into the hands of one of the most  well capitalized companies in the Florida marketplace,” said Citizens President and CEO Barry Gilway. “I think the logic behind this agreement is compelling.” 

After initially saying the $52 million deal was "not special," Scott's office called the board "tone-deaf" for approving it. Fasano called the deal a blatant example of "corporate welfare" and Artiles called it a "get rich" scheme for the 9-month-old Heritage.

See Weatherford's full statement below:

Fasano questions 'suspicious timing' of $52 million Heritage deal

Rep. Mike Fasano is the latest official to raise questions about a $52 million take-out deal between an upstart St. Petersburg insurance company and Citizens Property Insurance Corp.

Fasano, R-New Port Richey, penned a letter to the state’s Insurance Commissioner on Friday questioning whether Heritage Property and Casualty Insurance has already violated a May 17 consent order from the Office of Insurance Regulation. Heritage has firmly denied the accusation. 

Fasano alleged that Heritage had been contacting insurance agents and policyholders prior to May 23, when the company officially received approval to take out some 60,000 policies in a $52 million deal. That would be a violation of the OIR’s consent order, Fasano said, citing a part of the agreement that bans Heritage from contacting “any potential policyholder, including sending communication regarding this depopulation” prior to the deal being signed. 

Heritage firmly denies that it has been contacting policyholders, and said the company contacted agents last week as part of a standard procedure to alert them to an upcoming potential takeout. The company’s chairman, Bruce Lucas, said there was nothing untoward about that. 

“We are required to publish a wishlist,” of policies, he said. “We contact agents and say, ‘In the future we attempt to do a depopulation’.” 

McCarty’s office did not immediately respond to a request for clarification about the rules on when a takeout company can contact agents. 

Lucas said the company only began sending letters to homeowners today, after receiving consent from OIR.

As evidence, Fasano presented a letter and email received by Pasco County Supervisor of Elections Brian Corley with regards to a takeout offer from Heritage. A May 17 letter from Corley’s insurance agent informs him that Heritage has “selected” his policy for an “upcoming takeout.” The proposed takeout was approved by Citizens' board of governors on May 22, in a 3-2 vote. Corley received an email response from a Heritage employee on May 22, prior to the vote, saying that Heritage “offers a better policy” than Citizens. 

Heritage has maintained that this was an “automated” message in response to Corley, and OIR general counsel Belinda Miller said she did not believe this form of communication violated the consent order’s ban on communicating with policyholders prior to approval of the takeout. 

Good taxpayer deal or 'get-rich quick funding scheme' for $110k Rick Scott donor?

@ToluseO

TALLAHASSEE -- Two months after contributing $110,000 to Gov. Rick Scott’s reelection campaign, an upstart property insurance company is likely to reap a $52 million windfall, paid from the coffers of Citizens Property Insurance Corp.

Sitting on a record cash surplus of $6.4 billion, Citizens is hoping to ink a special deal Wednesday with Heritage Property and Casualty Insurance Company, a St. Petersburg firm that opened for business nine months ago and made significant political contributions.

Heritage has donated more than $140,000 to Scott and the Republican Party of Florida in recent months, and spent tens of thousands more lobbying the Legislature. Now it’s in line to get special treatment from Florida’s state-run insurance firm in the form of an unusual and lucrative “reinsurance quota share” agreement.

If the Citizens board of governors approves on Wednesday, the state-run insurer will pay Heritage up to $52 million to take over 60,000 policies, about $866 a piece.

“It’s an opportunity to get this deal done prior to the next hurricane season,” said Citizens CFO Sharon Binnun, defending the multimillion-dollar payment. “It’s an opportunity for Citizens to get another 50,000 policies off the books before another hurricane season.”

The proposal is the latest effort in Citizens’ controversial and aggressive campaign to reduce risk and revive the private insurance market.

Proponents say the push to shrink Citizens will pay off when the next hurricane hits, saving consumers from having to bail out the state-run insurer. Critics see the campaign cash and lobbying by Heritage as evidence that Citizens and Scott are tapping the insurer’s $6.4 billion surplus for special giveaways to politically-connected companies.

“Citizens’ board continues to fall prey to Tallahassee lobbyists who cook up these get rich funding schemes,” said Rep. Frank Artiles, R-Miami.

More here

What they’re saying: Reaction to Scott’s budget, vetoes

Lawmakers, lobbyists and lookers-on chimed in Monday after Gov. Rick Scott signed the state’s $74.1 billion spending plan for the coming year. Some applauded the governor for making historic investments in education, ports and business development. Others, smarting after Scott vetoed $368 million in spending projects endorsed by the Legislature, were none too happy. 

Here’s a roundup of some of the comments:

 --Senate Minority Leader Chris Smith, D-Fort Lauderdale, said he and the Senate Democrats were “extremely disappointed” by Scott’s budget vetoes. He referred to Scott as a “newcomer” who “misses a critical understanding” about the Legislature’s role in crafting a spending plan. 

Smith summed up his feelings in a tweet: “Gov. Scott fought hard to give 400 million tax break to manufacturers while cutting critical road and water projects for cities. SMH.”

--Senate President Don Gaetz, R-Niceville, kept a cordial tone, despite the fact that some of the major projects in his district were slashed by Scott’s veto pen. 

“Unlike the deficits and dysfunctions in Washington, today our Chief Executive signed a budget that lives within our means, meets the critical needs of the people of Florida, raises the salaries of state workers and effective teachers, pays down obligations instead of piling on more, puts aside money for a rainy day, and doesn't raise taxes by one dollar,” he said. 

Scott ready to give green light to texting bill?

A signing ceremony for the texting while driving bill (SB 52) has been set for 2-3 p.m. May 28th in Miami, according to an email listed on Project Sunburst, a website that displays executive staff emails in the Governor’s office, but Jackie Schutz, a spokesman for Gov. Rick Scott, wouldn't confirm the information.

She said the governor hasn’t yet received the bill and he is still "reviewing the legislation.

"There’s nothing to announce,” Schutz said.

Other emails on Sunburst noted signings for a few other bills, including HB 705 relating to economic development on June 3 in West Palm Beach and HB 1129, requiring care of infants born alive during a failed abortion, on June 5th somewhere in the Panhandle.

The texting bill, which was passed by the Senate May 2, would make texting while driving a secondary offense, which means a motorist would have to commit another offense, such as careless driving or speeding, in order to be pulled over. Once stopped, a driver could receive two tickets, one for the first infraction and one for texting. The penalty would be $30 for a first-time texting offense, a nonmoving violation. A driver would pay a $60 fine and be assessed three points if caught texting while driving again within five years, with more points added if the violation is in a school zone or another serious offense.

Scott reappoints agency heads Senate failed to confirm

Gov. Rick Scott reappointed three agency heads to their posts today, and they'll get another shot at Senate confirmation next year. If that doesn't happen, Surgeon General John Armstrong, Corrections Secretary Michael Crews and Department of Economy Opportunity executive director Jesse Panuccio will be out of a job.

Although the Senate confirmed dozens of Scott appointees during the session, there were many others who were passed over. Many were for specific reasons, such as Armstrong, who rubbed senators the wrong way, and members of the board overseeing the controversial Florida Polytechnic University. In other instances, the Senate said it simply ran out of time.

In total, the governor reappointed 42 people to their positions, including dozens of board and commission members. He has 45 days after session to reappoint anyone who failed to receive Senate confirmation, though if it happens two years in a row that person must leave the position.

"I am honored to continue serving Governor Scott and this reappointment is a reflection on the great work of the dedicated staff at DEO," Panuccio said via email. "Florida's economy is thriving and I look forward to driving the Governor’s pro-growth economic policies forward."

Here is Scott's statement on the three agency heads:

After Scott priority fails to get 80 votes, legislative staff flip-flop on supermajority clause

After Gov. Rick Scott’s highly prioritized manufacturing tax cut passed the Florida Legislature without receiving a two-thirds vote majority, legislative staff analysts have had a change of heart and now believe such a supermajority was not necessary. 

Last month, staff analysts in the Florida Senate said emphatically that a two-thirds vote was required, because the proposed sales tax exemption for manufacturing equipment would put a significant dent into local government revenue. 

“Therefore, this bill requires passage by 2/3 of the membership of each chamber,” the  legislative analysis dated April 2, 2013 states. The House analysts also raised the two-thirds vote as a possibility, and a top official in Scott's office told the Herald/Times in February he believed a supermajority vote was required.

On May 2, an amended version of the bill cleared the House in a hurriedly cast 68-48 vote, with all Democrats and a few Republicans voting against it. Despite falling short of the 80-vote supermajority previously cited, House Speaker Will Weatherford, R-Wesley Chapel, quickly declared the bill passed, and brushed aside concerns about its constitutionality. Democrats immediately promised to sue.

“We think it is extremely constitutional,” Weatherford said after the contentious vote, stating that he had discussed the issue with legislative legal staff. He followed up with a statement asking “Who would sue to stop a tax cut”?

Now, the non-partisan legislative analysts in the Florida House have backtracked from their initial claim that the bill might need a two-thirds majority and have fallen in line with the House Speaker’s position on its constitutionality.

An updated staff analysis from the Florida House, dated May 15, strips all references to Article VII, section 18 of the Florida Constitution (the portion protecting local governments from unfunded mandates). All previous staff reports had at least cited the constitutional clause, highlighting the requirement for a two-thirds majority vote when local government revenue is at stake. The Senate had been more definitive about the 2/3 vote requirement than the House, and a new analysis was not done by the Senate.

A spokesperson for Weatherford said final bill analyses traditionally do not include information about constitutionality.

Whereas initial staff analyses mentioned Department of Economic Opportunity estimates of up to $115 million in lost revenue for the state, the updated review does not cite any cost figure. DEO has estimated that the tax cut could cost cities and counties up to $26 million per year.

The final bill analyses does not cite those numbers, or any others, only stating that “it is not anticipated the provisions would significantly affect the authority of the counties and municipalities to raise revenue in the aggregate.”

The words “significantly” and “aggregate” are key, because the Constitution requires a two-thirds vote for any bill that has a significant impact on local governments revenue-collecting abilities. A sales tax cut for manufacturers will likely reduce the amount of revenue coming in to local government coffers.

Under the bill, the revenue loss for local governments—estimated at $13 to $26 million per year—far exceeds the $1.9 million threshold needed to qualify as a “significant” impact. But the Legislature's legal team has seized on the term “in the aggregate” to justify the bill’s constitutionality.

"Based on our staff's estimate, it does not have a significant impact," said Ryan Duffy, a spokesperson for Weatherford.

Case law on the issue is not definitive, so a lawsuit could set a legal precedent for the future.

Of note, the bill has changed since the first staff analyses, but the final version would still have a annual impact on local government revenue. Under the original bill, the sales tax cut would have kicked in this year and lasted forever. The updated bill creates a three-year tax cut period starting in 2014. It could save manufacturers more than $140 million per year, when state and local tax savings are combined.

The proposal was one of Scott’s top priorities for the 2013 session, as the governor said eliminating taxes on machinery will help “build up” manufacturing jobs in Florida.

Scott, who is expected to sign the bill soon, recently wrapped up a “victory tour” across the state to celebrate the bill’s passage.

“Manufacturers in Florida have been disadvantaged for too long because we were one of few states that taxed the purchase of manufacturing equipment,” Scott said in a statement. “With this legislation, Florida is now on a level playing field.”

He added “I look forward to signing this bill into law.”

@ToluseO

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Safety net hospitals scrambling to prevent $65 million Sott veto

Gov. Rick Scott may veto $65 million in hospital Medicaid funding, although safety net hospitals are mustering all their resources in order to change his mind.

The money is related to the state's transition to a new formula for paying hospitals for Medicaid, one that depends on services provided to patients instead of how long they are in a particular hospital's care. The Legislature provided the extra funding to help reduce the losses over 40 hospitals faced under the new formula, with safety nets among the worst hit.

That extra money was not a part of Scott's initial budget proposal, but the House insisted on it and the Senate agreed. If Scott vetoes it, Miami's Jackson Memorial hospital would lose the most cash: $23.3 million.

Shands Teaching Hospital in Gainesville would lose $11 million and Tampa General Hospital would see its funding slashed by $2 million. A range of rural and specialty hospitals would also lose funding, such as a $1 million loss for Moffitt Cancer Center in Tampa.

Scott's office is still finalizing his veto list, and the governor has until May 24 to sign the budget and announce the funding he eliminated. His office wouldn't say if DRG funding will be on the list.

"We are reviewing the matter, along with the entire budget," spokeswoman Jackie Schutz said.

Rep. Matt Hudson, R-Naples, and the House's health care budget chief, fought for that money to be included in the budget and said the governor's office hasn't told him it's in jeopardy. The money includes $27 million from the general fund and another $38 million in federal dollars.

Budget lands on Scott's desk, is tuition hike on the chopping block?

It was only Friday that lawmakers passed the $74.5 billion budget.

Now, it's Gov. Rick Scott's turn. The 450-page document landed on Scott's desk Thursday. He has until May 24 to sign it -- and veto anything he doesn't deem appropriate.

In his first year in office in 2011, Scott vetoed $615 million in member projects. Last year, Scott vetoed $143 million in various projects. He's been coy so far about what he's going to reject this year, but he'll have a lot to choose from. It's stuffed with hometown spending on cultural centers, water projects and college and university funding.

The biggest single veto drama is whether Scott will deep-six the proposed 3 percent tuition hike.  University leaders are expecting Scott to veto it. Former Gov. Charlie Crist did the same thing in 2007. Although some questioned the legality of Crist's actions, Scott's general counsel says it set a precedent that puts Scott on solid ground if he does the same this year.

Universities anticipate Gov. Rick Scott veto of tuition increase

A 3 percent tuition increase was written into the state budget, but state university leaders aren't banking on that money. Gov. Rick Scott has made it clear that he doesn't support increasing the cost of earning a degree.

Here's a excerpt from an article that will be published in Friday's paper:

Most expect Gov. Rick Scott to veto the modest tuition increase when he signs the state budget into law in the coming weeks.

"He's come out strongly against tuition increases and fee increases, and now will be a time to see if the governor stands by his word," said Brian Goff, the outgoing student body president at the University of South Florida.

Scott hasn't formally received the budget from the Legislature, and when he does he'll have 15 days to decide whether to sign it into law or veto it. But he has been clear where he stands on tuition.

"I do not support any tuition increase," the governor says whenever asked.

There's enough to like in the budget for the state's 12 public universities, even without the money a tuition increase would bring.

Read more here.