State Budget, Taxes and Fees
Both Chambers are working through competing budget proposals. Although the proposals have many differences, the biggest difference right now appears to be the amount of money funding the Governor’s priorities: tax relief and economic development incentives. The House and Senate have differing proposals, with the House readying to pass a nearly $1b tax cut package, and the Senate a much smaller number. On the Senate side, it has expressed support to fund the Governor’s request to put a more than $100m economic development/incentive fund – a fund designed to be used by the state’s economic development arm to lure more businesses to Florida. The House has been lukewarm to the concept. As these and other spending issues come to a head the next few weeks, expect to read about the Governor exercising maximum leverage to fund as many of his priorities as possible. Here is an Orlando Sentinel article that just ran describing the Governor’s Efforts.
These issues are important for the FSDA to not only follow, but actively engage in. The State budget funds our regulators underneath the Office of Financial Regulation, and in the past, we have had to fight alongside the OFR to protect the dollars our industry fees paid to the state to ensure it has adequate resources for efficient licensing programs. This year, the Office is having success funding its priorities. Also, in recent years, there were discussions and proposals to increase the fees on the industry to generate additional revenue. We opposed these measures at the time – and would do so again today because of the large amount of dollars generated by these fees that go into the state coffers, and are not walled off within the confines of the OFR. Fortunately, our advocacy efforts have resulted in no more proposals to raise industry fees.
An additional proposal that has surfaced over the years has been the removal of certain tax exempt transactions as a broader move to “reform” the state’s tax code. This year, House Finance and Tax Chairman Matt Gaetz (R-Destin) fielded proposals from his committee members to put together a broad package of tax cuts and reforms. Early in the process, we met with the Chairman and expressed our desire to see “securities transactions” remain exempt from sales tax. The Chairman agreed with our position on this. His tax package written about here in this Palm Beach Post article contains nothing whatsoever harmful to our industry, and contains loads of tax cuts and incentives that will likely spur business in the State of Florida. However, these things are never done until the budget is complete and signed. The FSDA will be on guard throughout the process.
Social Media – Brokerage Monitoring Legislation
In 2015, legislators filed bills that would have prevented employers from monitoring the social media accounts of their employees. These bills were filed in the name of protecting employees from overly intrusive bosses. However, for the industry, the legislation was a threat because it would have put state law at odds with federal regulations that require supervision and monitoring of these accounts. The FSDA was able to work with other industry stakeholders in securing language that exempted the industry from the law. The bills did not pass in 2015. However, they were again filed in 2016, but both bills contained the FINRA exemption language we crafted. Here is the text of Senate Bill 186. Both bills appear they will fail to pass again in 2016. The House bill has yet to receive a hearing.
One of the priorities of the financial services industry – and one that we have specifically supported in the past is requiring financial literacy courses to be a mandatory graduation requirement in Florida high schools. Last year, the FSDA, along with other stakeholders were successful in leveraging the Florida Department of Education to begin to incorporate financial literacy into the coursework of “Economics” in Florida high schools. This year began the first year of that coursework. Although this wasn’t entirely what the industry wanted – a dedicated course ONLY for financial literacy, it was an incremental achievement. This year. Legislation was again filed in the Florida Senate to require a standalone course. That will has not had a hearing and is unlikely to pass. Here is the text of Senate Bill 96.
Mergers and Acquisition Broker Exemption from Registration
Late last year, the FSDA was asked to comment on legislation that creates a state level exemption for transactions conducted by an M&A Broker. The FSDA declared its neutrality. Some of the committee hearings have been confusing as legislators were given conflicting reports on what the bill actually did. Once the OFR explained the legislation, there seemed to be no controversy. There have been no opponents to the legislation. The bills have cleared the requisite committees and are headed for both floors of the Legislature. Here is the newest text of Senate Bill 286 by Senator Jeff Brandes. I am also attaching the STAFF REPORT to better provide an understanding of the legislation.
Trial Lawyer Attacks
Over the last ten years, the industry has had to fight off numerous hostile amendments to legislation that would have allowed for more causes of action against the industry or tilted the litigation playing field against the industry in such a way that would have cost the industry many millions of dollars. This year, the FSDA has met with the Chairs of all relevant committees and expressed its opposition to any late filed amendments that would wreak havoc on the industry. These members were open minded and agreed that they have no interest in allowing these last minute sneak attacks to harm the industry, but they also cautioned us to be prepared in the event something is filed. During our meeting in December with House Majority Whip Jim Boyd (R-Bradenton), he reiterated to the FSDA that our active engagement in Tallahassee protects the industry, and that we cannot afford to let our guard down at all. He reminded those who attended the breakfast that trial lawyer attacks do not just come from one side of the political aisle, but from both, as they have established a significant foothold within Republican circles in Tallahassee.
Sean Stafford, Partner
Advantage Consulting Team