Budget Update

The House and Senate have passed their respective budgets (40-0 in the Senate and 104-14 in the House) this week in Tallahassee setting the table for the Budget Conference Committee to commence, negotiating what will ultimately become the GAA or General Appropriations Act, SB 2500. The budget conferees will be appointed shortly and could begin work as early as next week.

Lawmakers have until April 27th to finalize the budget meeting the 72 hour "cooling off" period before April 30th, the last day of regular session. Currently, the House is at roughly $97 billion while the Senate comes in at $95 billion. The current state budget is $92 billion. With $10 billion allocated from the recently passed American Rescue Plan Act and a recent $2 billion increase in revenue projections, budget writers should have ample resources to meet the state's needs in FY 2021-22.

Bill Action

Higher Education
HB 1261 Education among other provisions, including providing liability protections for educational institutions for actions related to the COVID-19 pandemic, provides minimum performance standards for institutions to be eligible to participate in the Effective Access to Student Education (EASE) tuition assistance program. Currently there are no criteria as EASE was established as a grant program for any full-time Florida resident student to attend a private, non-profit college or university.

The bill creates a statutory requirement for recipient institutions to report prior year academic statistics for certain metrics, including:

  • Entrance requirements for the year, and if required by the institution, the minimum test score and grade point average requirements for freshmen;
  • Percentage of students receiving Pell Grants, Bright Futures, and other academic aid;
  • Graduation rates;
  • Retention rates;
  • Job placement rates;
  • Job placement rates 1 year after graduation;
  • Total federal loan amounts disbursed; and
  • Total number of students who received federal loans. The bill also specifies that institutions must meet three or more of the following metrics to remain eligible to receive EASE grants:
  • A post-graduate employment or continuing education rate of at least 77 percent as submitted in the report dated September 202055, and at least 78 percent and 79 percent as submitted in each subsequent annual report, respectively;
  • A graduation rate of at least 48 percent as submitted in the report dated September 202056, and at least 49 and 50 percent as submitted in each subsequent annual report, respectively;
  • An academic retention rate of at least 71 percent as submitted in the report dated September 202057, and at least 72 and 73 percent as submitted in each subsequent annual report, respectively;
  • A student access rate of at least 45 percent as submitted in the report dated September 202058 , and at least 46 and 47 percent as submitted in each subsequent annual report, respectively; and
  • An average federal loan disbursement rate for undergraduates of no more than $7,320 as submitted in the report dated September 202059, and no more than $7,289 and $7,258 as submitted in each subsequent report, respectively.

The effective of the proposed criteria would eliminate EASE funding for 16 of the 34 eligible colleges and universities that currently receive the grant. Which means, approximately 12,826 students would lose $2,841 in tuition assistance from EASE. HB 1261 passed the House Education & Employment Committee and is available for floor action.

A budget conforming bill, HB 5601, also contains the EASE criteria changes. It will be part of the budget negotiation process between the Senate and House.

SB 1798 Higher Education establishes a waiver of 100 percent of tuition and fees for one course in a program of strategic emphasis for every course in such a program for which a student pays the full tuition and fees. In order to qualify for the waiver, a student must:

  • Be a resident for tuition purposes.
  • Initially enroll full-time at a state university for the fall academic term immediately following high school graduation.
  • Earn at least 60 semester credit hours towards a baccalaureate degree within two years after initial enrollment.
  • Enroll in a program of strategic emphasis as specified by the Board of Governors (BOG).

In addition, the bill specifies that a waiver so granted is applicable only for upper-level courses and up to 110 percent of the number of required credit hours of the baccalaureate degree program. The bill requires the BOG to adopt regulations to administer the above, and requires each state university to report to the BOG the number and value of all such waivers granted annually. The bill does not require a state appropriation. However, state universities will have reduced revenues from tuition and fees for each eligible student who enrolls in a program of strategic emphasis. SB 1798 passed the Senate Appropriations Subcommittee on Education and has one more reference remaining.

SPB 7072 Social Media Platforms establishes a violation for social media deplatforming of a political candidate and requires a social medial platform to meet certain requirements when they restrict speech by users.

The bill prohibits social media platforms from deplatforming candidates for political office and allows the Florida Elections Commission to fine a social media platform $100,000 per day for deplatforming statewide candidates and $10,000 per day for deplatforming all other candidates, in addition to the remedies provided in ch. 106, F.S., relating to campaign financing. Additionally, if a social media platform knowingly provides free advertisements for a candidate, such advertisement is deemed an in-kind contribution, and the candidate must be notified.

The bill establishes restrictions for contracting with public entities for certain social media platforms who have violated antitrust laws and who have been placed on the Antitrust Violator Vendor List. The Department of Management Services is required to maintain the Antitrust Violator Vendor List (list) of the names and addresses of the people or affiliates who have been disqualified from the public contracting and purchasing process. The bill outlines the process for placing such person or affiliates on the list, and the process for a person or affiliates to appeal the decision to place such person or affiliate on the list. The bill provides for exceptions from the applicability of the antitrust violator provisions.

The bill requires a social media platform to:

  • Publish the standards, including detailed definitions, it uses or has used for determining how to censor, deplatform, and shadow ban;
  • Apply censorship, deplatforming, and shadow banning standards in a consistent manner among users on the platform;
  • Inform each user about any changes to its user rules, terms, and agreements before implementing the changes and may not make changes more than once every 30 days; Provide a mechanism that allows a user to request the number of other individual platform participants who were provided or shown the user's content or posts, and provide that information upon request;
  • Categorize algorithms used for post-prioritization and shadow banning and allow a user to opt out of post-prioritization and shadow banning algorithm categories to allow sequential or chronological posts and content (the opt-out opportunity must be reoffered annually);
  • Provide users with an annual notice on the use of algorithms for post-prioritization and shadow banning; and
  • Allow a user who has been deplatformed to access or retrieve all of the user's information, content, material, and data for at least 60 days after being deplatformed.

SB 7072 establishes that a social media platform that fails to comply with these requirements may be found in violation of the Florida Deceptive and Unfair Trade Practices Act by the Department of Legal Affairs (DLA). Additionally, a user may bring a private cause of action against a social media platform for failing to apply consistently certain standards and for censoring or deplatforming without proper notice. SB 7072 passed the Senate Governmental Oversight and Accountability Committee and has one reference remaining.

Taxes and Trust Funds
HB 50 Taxation requires marketplace providers and out-of-state retailers with no physical presence in Florida to collect Florida's sales tax on sales of taxable items delivered to purchasers in Florida if the marketplace provider or out-of-state retailer makes a substantial number of sales into Florida. A substantial number of remote sales means conducting any number of taxable retail sales in an amount exceeding $100,000 during the previous calendar year. The bill makes conforming changes to ensure consistent administration of the new provisions.

The bill also requires marketplace providers to collect and remit three fees related to the sales tax (the waste tire fee, lead-acid battery fee, and E911 prepaid wireless fee), beginning April 1, 2022, and provides a safe harbor for businesses who failed to collect the sales tax prior to July 1, 2021, as long as they register with the Department of Revenue prior to October 1, 2021.

The bill removes the requirement that dealers use a bracket system to calculate the applicable sales tax on transactions, and replaces it with a rounding system.

To avoid a significant, unexpected increase in reemployment assistance tax rates on Florida employers, the bill temporarily directs the Department of Revenue to calculate applicable rates without respect to pandemic effects until such time as the Unemployment Compensation Trust Fund has been replenished to a prepandemic level. The bill also directs $973.6 million (FY 2021-22), increasing to $1.08 billion (FY 2022-23 forward), to be distributed from sales tax collections to the Unemployment Compensation Trust Fund each year, until such time as the trust fund reaches its pre-pandemic balance ($4,071,519,600). Once the trust fund reaches its pre-pandemic balance, the bill reduces the business rent tax from 5.5% to 2%.

The Revenue Estimating Conference (REC) estimated that the sales tax collection provisions of the bill will have a positive revenue impact in FY 2021-22 totaling $1,203.4 million ($1,337.0 million recurring) of which $973.6 million ($1,079.7 million recurring) is on General Revenue, $0.3 million ($3.6 million recurring) is on state trust fund revenues, and $229.5 million ($253.7 million recurring) is on local government revenues. HB 50 passed the Legislature and is awaiting to be sent to the Governor.

HB 5011 Termination of the Lawton Chiles Endowment Fund - The Lawton Chiles Endowment Fund (LCEF) was established in 1999 to receive a portion of the nonrecurring receipts from the state's settlement agreement with tobacco companies. The LCEF is administered by the State Board of Administration (SBA) and has an estimated market value of approximately $958 million. The state budget reserves are comprised of the LCEF, the Budget Stabilization Fund (BSF), and unallocated general revenue (GR). During previous emergencies and economic downturns, the LCEF has been used to offset shortfalls in GR and to provide for emergency spending. The State Constitution requires the BSF to be repaid and maintained at specified thresholds, if accessed, unlike the LCEF and unallocated GR.

The bill eliminates the LCEF and redirects the funds to the BSF. The bill directs the SBA to liquidate the assets in the LCEF by June 30, 2022. The bill will increase the reserves held in the BSF. HB 5011 was passed by the Full House on a party line vote, 75-42. The Senate subsequently gutted the bill and requested a conference.

*Summaries provided by House and Senate bill analyses

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.