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                              T H E   C A B I N E T 
                          S T A T E   O F   F L O R I D A
                           STATE BOARD OF ADMINISTRATION
                              DIVISION OF BOND FINANCE
                          DEPARTMENT OF VETERANS' AFFAIRS
                               DEPARTMENT OF REVENUE
                              BOARD OF TRUSTEES OF THE
                           INTERNAL IMPROVEMENT TRUST FUND
                        The above agencies came to be heard before 
               THE FLORIDA CABINET, Honorable Governor Bush 
               presiding, in the Cabinet Meeting Room, LL-03, 
               The Capitol, Tallahassee, Florida, on Wednesday, 
               November 29, 2000, commencing at approximately 
               9:15 a.m. 
                                    Reported by:
                                 LAURIE L. GILBERT
                          Registered Professional Reporter
                              Certified Court Reporter
                            Certified Realtime Reporter
                             Registered Merit Reporter
                              Notary Public in and for
                           the State of Florida at Large
                         ACCURATE STENOTYPE REPORTERS, INC.
                                  100 SALEM COURT
                             TALLAHASSEE, FLORIDA 32301


                                 November 29, 2000
                        Representing the Florida Cabinet: 
                        JEB BUSH
                        BOB MILLIGAN
                        KATHERINE HARRIS
                        Secretary of State
                        BOB BUTTERWORTH
                        Attorney General
                        BILL NELSON
                        TOM GALLAGHER
                        Commissioner of Education
                                      *   *   *














                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
                                    I N D E X
               ITEM                  ACTION                PAGE
               (Presented by Tom Herndon,
                   Executive Director)
                1             Approved                       5
                2             Approved                       5
                3             Approved                       6
                4             Approved                      13
               (Presented by J. Ben Watkins, III,
                1             Approved                      16
                2             Approved                      16
                3             For Information Only          18
               (Presented by Robin Higgins,
                   Executive Director)
                1             Approved                      66
                2             Approved                      66
                3             For Information Only          66
               (Presented by James A. Zingale, Ph.D.,
                   Executive Director)
                1             Approved                      79
                2             Approved                      79
                3             Approved                      80
                4             Approved                      80
                5             Approved                      97





                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
                                     I N D E X
               ITEM                  ACTION                PAGE
               (Presented by Teresa Tinker,
                1             Approved                      98
                2             Approved                      99
               TRUST FUND:
               (Presented by David B. Struhs,
                1             Approved                     100
                2             Approved                     101
                3             Approved                     107
               Substitute 4   Approved                     110
               Substitute 5   Approved                     111
                6             Approved                     112
               Substitute 7   Approved                     113
               Substitute 8   Withdrawn                    113
                9             Approved                     114
               Substitute 10  Approved                     118
               11             Deferred                     119
                        CERTIFICATE OF REPORTER            120 
                                      *   *   *








                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           5
                                 November 29, 2000
         1                    P R O C E E D I N G S

         2              (The agenda items commenced at 9:35 a.m.)

         3              GOVERNOR BUSH:  State Board of 

         4          Administration.

         5              MR. HERNDON:  Item Number 1.

         6              COMPTROLLER MILLIGAN:  I'll move the 

         7          minutes.

         8              TREASURER NELSON:  Second.

         9              GOVERNOR BUSH:  Moved and seconded.

        10              Without objection, it's approved.

        11              Item 2.

        12              MR. HERNDON:  Item Number 2, we're 

        13          requesting approval to file some rules for 

        14          notice to repeal.  And there are a variety of 

        15          them that cut across a number of functions of 

        16          the Board.  Most of them are ministerial in 

        17          nature, and they've either been replaced by 

        18          statute, or done away with, or other forms of 

        19          obsolescence.

        20              TREASURER NELSON:  And I move the item.

        21              COMPTROLLER MILLIGAN:  And second.

        22              GOVERNOR BUSH:  Moved and seconded.

        23              Without objection, it's approved.

        24              MR. HERNDON:  Item Number 3 is the report 

        25          of the Executive Director for the month of 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           6
                                 November 29, 2000
         1          September for this year, for the fund 

         2          activity -- for the FRS.

         3              COMPTROLLER MILLIGAN:  Noted.

         4              TREASURER NELSON:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              MR. HERNDON:  Governor, perhaps it would be 

         8          worthwhile, before we move to the Florida 

         9          Hurricane Finance Corporation to just mention 

        10          briefly, by way of a status report -- we don't 

        11          have a formal one on the agenda today.  We 

        12          typically do at least once a month. 

        13              But there have been several things that 

        14          have occurred in the last few days, and I 

        15          thought I would just touch on those briefly, 

        16          with your permission.

        17              First, I -- I want to point out that our 

        18          Investment Advisory Council is meeting this 

        19          morning at 10:00 o'clock, and then we're having 

        20          the first joint meeting of the Investment 

        21          Advisory Council and the Public Employee 

        22          Optional Retirement Program Advisory Council 

        23          this afternoon at 1:00 o'clock, which will be a 

        24          good meeting.  And we've got a number of 

        25          significant items on the agenda this afternoon.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           7
                                 November 29, 2000
         1              Beyond that, however, we did have a public 

         2          hearing yesterday on the proposed rule as it 

         3          relates to the Investment Policy Statement.  We 

         4          had a number of comments from the vendors.  Two 

         5          of the vendors indicated yesterday that they do 

         6          intend to protest the rule. 

         7              In addition, we received on Monday 

         8          afternoon the formal written comments of the 

         9          Joint Committee on Administrative Procedures 

        10          from the Legislature on the proposed rule. 

        11              All of that produces a necessity for some 

        12          modifications to the rule.  Some of the 

        13          recommendations, I guess, is the proper 

        14          terminology from the Joint Administrative 

        15          Procedures Committee are fairly modest in 

        16          nature. 

        17              There are a couple of fairly significant 

        18          recommendations that they have sent to us.  And 

        19          as you know, without their ultimate approval, a 

        20          rule cannot be adopted.  So --

        21              GOVERNOR BUSH:  What -- can you describe 

        22          the substantive ones?

        23              MR. HERNDON:  Well, they've raised a couple 

        24          of questions with respect to the use of the 

        25          language, bundled provider, for example.  They 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           8
                                 November 29, 2000
         1          point out that that word does not appear in the 

         2          statutes; and, consequently, they're 

         3          questioning its use in the rule.

         4              We've always used that as a -- as a phrase 

         5          of convenience.  But they -- they question 

         6          its -- its appropriateness. 

         7              They've also raised questions about the 

         8          selection of one bundled provider. 

         9              They've also raised some questions about 

        10          the amount of services that a bundled provider 

        11          can offer under the rule as we've described it, 

        12          and they want to get some further clarification 

        13          from us.

        14              So we got those comments on Mondays.  

        15          And -- and the upshot of all of this, I think, 

        16          is that between the comments from JAPC, which 

        17          were received on Monday; and the comments from 

        18          the two vendors that were received in writing 

        19          yesterday, is that it probably postpones our 

        20          planned consideration of the Investment Policy 

        21          Statement for December 12th. 

        22              We had planned on bringing it to you.  That 

        23          was the last step in the process.  We would 

        24          like to still make that deadline.  But the 

        25          reality is we cannot get back to our two 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           9
                                 November 29, 2000
         1          advisory councils between now and the 12th, and 

         2          then get to you, and meet all the procedural 

         3          deadlines and everything else.

         4              Now, we --

         5              GOVERNOR BUSH:  The Brevard --

         6              MR. HERNDON:  -- do have --

         7              GOVERNOR BUSH:  -- Brevard County Tourist 

         8          Development Council is going to be very upset, 

         9          Tom, on that.

        10              MR. HERNDON:  I'm -- I'm sorry.

        11              Well, we'll still have an agenda, I can 

        12          assure you of that.  But it perhaps will not be 

        13          quite as -- as substantive.

        14              We do have a -- another joint meeting of 

        15          the two Advisory Council meetings scheduled for 

        16          the 21st.  So our plan now is to take the next 

        17          couple of weeks, do the review that we need to 

        18          do of the comments that we received from the 

        19          vendors and the JAPC comments, get those out to 

        20          the advisory councils, meet with them on the 

        21          21st, and then bring all of this to you all at 

        22          the special meeting that's now scheduled for 

        23          January 4th.

        24              It's unfortunate, but it's -- it's a 

        25          reality.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          10
                                 November 29, 2000
         1              In addition to that, as you know, we did 

         2          have protests to the RFI that we had released 

         3          on the third party administrator, the 

         4          record keeper, for the program.  We've had a 

         5          number of meetings with the protesting parties 

         6          before they protested, and after they filed a 

         7          protest to try and work out an accommodation. 

         8              We weren't really able to do that, although 

         9          they've now given us some additional 

        10          suggestions yesterday that -- that may have a 

        11          bearing on -- on that ultimately.

        12              But the -- the final result of that was 

        13          that we withdrew the third party administrator 

        14          RFI on Monday, and reissued it on Tuesday with 

        15          some modifications that we hope neutralizes the 

        16          RFI. 

        17              It was never our intention, and I -- and I 

        18          don't think we did, but I -- it was never our 

        19          intention to make policy in the RFI.  We always 

        20          were attempting to derive policy from the 

        21          Investment Policy Statement and simply let the 

        22          RFI be the ministerial function that it is.

        23              Unfortunately, it was protested.  We're 

        24          hoping that what we've done is sanitize the RFI 

        25          to the point where it will not be protested, 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          11
                                 November 29, 2000
         1          and they'll focus their attention on the 

         2          Investment Policy Statement, where the real 

         3          policy debate should occur.

         4              Now, in the process, we may have 

         5          inadvertently messed up the schedules a little 

         6          bit.  But I think in the long run, it will be 

         7          to our advantage, and we -- we took that step 

         8          with great deliberation, and -- and discussion 

         9          with counsel, and -- and others on the subject.

        10              In the meantime though, I -- I want to 

        11          assure the Trustees that we are moving forward.  

        12          We've got, as I said, a number of very 

        13          substantive items in front of the -- the 

        14          advisory councils today. 

        15              We're taking the selection evaluation 

        16          criteria for the investment providers today, 

        17          selection evaluation criteria for the education 

        18          vendors today, and a selection evaluation 

        19          criteria for the asset transition broker today. 

        20              So there's quite a bit of discussion and 

        21          activity that's taking place, and we are at 

        22          least moving forward on -- on those various 

        23          fronts.

        24              GOVERNOR BUSH:  Tom, are we still the 

        25          largest pension fund to undertake a large scale 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          12
                                 November 29, 2000
         1          defined contribution alternative? 

         2              MR. HERNDON:  As far as I know, we are, 

         3          Governor.  Although I did read a story the 

         4          other day, and I think I'll probably have to 

         5          investigate this personally, about one in 

         6          Sweden that is -- is in the process of being 

         7          converted to a defined contribution plan in 

         8          part.  So --

         9              GOVERNOR BUSH:  I was told by the -- the 

        10          soon-to-be newest member again of the SBA, that 

        11          he wanted to go with you.

        12              MR. HERNDON:  I can understand --

        13              COMMISSIONER GALLAGHER:  Sign me up.

        14              MR. HERNDON:  -- that.

        15              GOVERNOR BUSH:  It was just a rumor.

        16              COMMISSIONER GALLAGHER:  I just found out 

        17          about it, but I'm certainly willing to take the 

        18          plunge.

        19              MR. HERNDON:  That completes a brief status 

        20          report, Governor. 

        21              If -- with your permission, we'll move to 

        22          Item Number 4, which is to call the Board 

        23          members of the Florida Hurricane Catastrophe 

        24          Fund Finance Corporation together.  And that 

        25          would include Dr. Nicholson and Ben Watkins, 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          13
                                 November 29, 2000
         1          plus the three of you.

         2              And the purpose of this Board meeting is to 

         3          recognize that we've had two resignations of 

         4          corporate officers.  That was the Treasurer of 

         5          the corporation, Joan Lazar; and the Secretary, 

         6          Ruth Gokel, who are employees of the CAT fund, 

         7          and fulfilled these functions on a ministerial 

         8          basis. 

         9              And then to appoint as new Treasurer, 

        10          Anne Bert; and new Secretary, Tracy Allen, who 

        11          are the replacement employees.

        12              So with your permission, if a motion were 

        13          made to that effect, we could take care of 

        14          this.

        15              TREASURER NELSON:  I move it.

        16              COMPTROLLER MILLIGAN:  And I will second.

        17              GOVERNOR BUSH:  Moved and seconded.

        18              Without objection, it's approved.

        19              MR. HERNDON:  Thank you very much.

        20              That completes the --

        21              COMPTROLLER MILLIGAN:  I move --

        22              MR. HERNDON:  -- agenda.

        23              COMPTROLLER MILLIGAN:  -- that we 

        24          adjourn --

        25              Have to move adjournment of this operation.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          14
                                 November 29, 2000
         1              GOVERNOR BUSH:  Is there a --

         2              TREASURER NELSON:  Second.

         3              GOVERNOR BUSH:  -- second?

         4              There's a motion to adjourn, and second.

         5              Without objection, it's approved as well.

         6              MR. HERNDON:  Thank you.

         7              GOVERNOR BUSH:  Thank you.

         8              MR. HERNDON:  That completes the agenda.

         9              (The State Board of Administration Agenda 

        10          was concluded.)

        11                              *   *   *















                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             15
                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Well --

         2              GOVERNOR BUSH:  Division of Bond Finance.

         3              COMMISSIONER GALLAGHER:  Governor, I just 

         4          wanted to mention that there is no Education 

         5          agenda today.

         6              And this is the first time there has been 

         7          no Education agenda, and I just wanted to brag 

         8          about it.  I'm glad there isn't.

         9              GOVERNOR BUSH:  How quickly they move on, 

        10          you know?  It's just --

        11              COMMISSIONER GALLAGHER:  There will be one 

        12          next week though --

        13              GOVERNOR BUSH:  What's Education?

        14              COMMISSIONER GALLAGHER:  -- next meeting.

        15              ATTORNEY GENERAL BUTTERWORTH:  First time 

        16          in 14 years I've been here -- 

        17              COMMISSIONER GALLAGHER:  It is.  Just 

        18          thought y'all would like to know that, in case 

        19          you missed it.

        20              TREASURER NELSON:  Well, if Frank were 

        21          here, there would be an Education agenda.

        22              COMMISSIONER GALLAGHER:  And it would be a 

        23          long one.

        24              GOVERNOR BUSH:  It might be an ad hoc.

        25              COMMISSIONER GALLAGHER:  Well, I'm sure 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             16
                                 November 29, 2000
         1          Charlie'll have plenty to have on the agenda.

         2              GOVERNOR BUSH:  Very good.

         3              Welcome, Ben.

         4              COMMISSIONER GALLAGHER:  We'll save it for 

         5          him.

         6              MR. WATKINS:  Thank you.

         7              Item Number 1 is approval of the minutes of 

         8          the November 16th meeting.

         9              COMMISSIONER GALLAGHER:  Move the minutes.

        10              ATTORNEY GENERAL BUTTERWORTH:  Second.

        11              GOVERNOR BUSH:  Moved and seconded.

        12              Without objection, it's --

        13              MR. WATKINS:  Item Number 2 is a resolution 

        14          authorizing the issuance of up to 

        15          11 million dollars in Board of Regents parking 

        16          facility revenue bonds for construction of a 

        17          parking garage at Florida State University.

        18              COMMISSIONER GALLAGHER:  Motion on 2.

        19              ATTORNEY GENERAL BUTTERWORTH:  Second.

        20              GOVERNOR BUSH:  Moved and seconded.

        21              Without objection, it's approved.

        22              Where's that going to be?

        23              MR. WATKINS:  I'm not sure exactly the 

        24          physical location, Governor.  But they've got 

        25          a -- a five-year program that --

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             17
                                 November 29, 2000
         1              GOVERNOR BUSH:  It's not a parking 

         2          garage --

         3              MR. WATKINS:  -- component of it.

         4              ATTORNEY GENERAL BUTTERWORTH:  How many 

         5          cars will that park? 

         6              MR. WATKINS:  Don't know the answer to 

         7          that, General.

         8              GOVERNOR BUSH:  It's about -- if it's a 

         9          fancy garage -- I don't know how they value the  

        10          land, but it could be, like, 10,000 per 

        11          space --  

        12              COMMISSIONER GALLAGHER:  They already got 

        13          the land.  So --

        14              GOVERNOR BUSH:  -- eight thousand per 

        15          space.  So you do the math on it.  It's a 

        16          pretty good size.

        17              COMMISSIONER GALLAGHER:  They'll put it 

        18          under the stadium. 

        19              Just kidding.

        20              GOVERNOR BUSH:  Don't start.

        21              COMMISSIONER GALLAGHER:  I just wondered if 

        22          you could get anything else on that land.  Got 

        23          to be a classroom building -- 

        24              GOVERNOR BUSH:  Actually, there is one more 

        25          going up. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             18
                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Because there --

         2              GOVERNOR BUSH:  Communications building.

         3              MR. WATKINS:  Item Number 3, Governor, is 

         4          a -- a presentation.  It's an annual update of 

         5          the State's debt affordability study. 

         6              A year ago, we conducted the first 

         7          comprehensive analysis of the State's debt 

         8          position.  And this is the first annual update 

         9          of the information that we provided in 

        10          connection with that debt affordability study.

        11              By way of review, there are really three 

        12          primary purposes in connection with the debt 

        13          affordability study.  One is to develop an 

        14          analytical approach for monitoring and managing 

        15          the State's debt position. 

        16              Secondly, what we're doing is integrating 

        17          an Executive Branch function with traditionally 

        18          a Legislative branch function.  Your review of 

        19          the State's financing programs is essentially 

        20          an Executive Branch function; the capital 

        21          spending decisions made through the 

        22          appropriations process is a legislative 

        23          function.  And we are seeking to have a -- an 

        24          integrated approach for both of those branches 

        25          of government.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             19
                                 November 29, 2000
         1              And thirdly, it's to provide information to 

         2          policymakers to evaluate the long-term 

         3          financial impact of borrowing decisions, and to 

         4          assist them in prioritizing capital spending.

         5              The method -- the methodology for preparing 

         6          the debt affordability study involves 

         7          cataloging all State debt, whether or not it's 

         8          issued through the Division of Bond Finance or 

         9          not; evaluating trends in our debt issuance 

        10          over the last ten years; calculating our -- the 

        11          relevant debt ratios, and comparing those to 

        12          both national medians, as well as our ten-state 

        13          peer group median; designating a benchmark debt 

        14          ratio, which we designate a debt service to 

        15          revenues is our relevant benchmark debt ratio; 

        16          establishing guidelines for future bonding 

        17          capacity, which is 6 percent as a target, and 

        18          8 percent as a cap; calculating available debt 

        19          capacity within those guidelines; and 

        20          performing a sensitivity analysis to assess the 

        21          volatility in that ratio, based on different 

        22          economic climates.

        23              Through the process of analyzing our debt 

        24          position, in -- in effect, what we've done is 

        25          to develop a model to assess changes for two 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             20
                                 November 29, 2000
         1          things: 

         2              One is future expected debt issuance; and 

         3          the second is future expected revenue 

         4          collections.  And the model is dynamic, it's 

         5          not static.  And what I mean by that is it can 

         6          be updated for the most current information in 

         7          order to evalua-- evaluate the impact on the 

         8          State's debt position, and its debt capacity 

         9          for changes in plans and changes in the 

        10          economy.

        11              So what we've done in connection with the 

        12          update of the debt affordability analysis is to 

        13          calculate the State's total debt outstanding, 

        14          evaluate the growth in both total debt 

        15          outstanding, as well as our annual debt service 

        16          payment obligations, compare that debt 

        17          outstanding at the end of last year to the debt 

        18          outstanding at the end of this year, update the 

        19          projections to include revised future borrowing 

        20          plans, as well as updating the projections for 

        21          revised revenue estimates; recalculating the 

        22          benchmark debt ratio, and comparing it to last 

        23          year's; and lastly, calculating the change in 

        24          our estimated borrowing capacity based on our 

        25          6 percent target.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             21
                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Ben, could I -- 

         2          could I ask you a question? 

         3              MR. WATKINS:  Sure.

         4              COMMISSIONER GALLAGHER:  When you did 

         5          your -- your growth of debt outstanding, and 

         6          you said you covered everything, I don't see 

         7          housing here. 

         8              Is there a reason it's not?

         9              MR. WATKINS:  The Housing Agency is the 

        10          only State agency -- and most of that debt, as 

        11          you know, is secured by loans to developers for 

        12          multifamily --

        13              COMMISSIONER GALLAGHER:  Right.

        14              MR. WATKINS:  -- housing projects.

        15              So as such, it's not, from a financial 

        16          standpoint, an obligation of the State -- 

        17              COMMISSIONER GALLAGHER:  So there is no 

        18          full faith and credit of the State involved in 

        19          that at all?

        20              MR. WATKINS:  Correct.

        21              And only on --

        22              COMMISSIONER GALLAGHER:  But some of these 

        23          don't have full faith and credit either, 

        24          because they're revenue.

        25              MR. WATKINS:  Right.  But they're 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             22
                                 November 29, 2000
         1          traditional State revenues --

         2              COMMISSIONER GALLAGHER:  Right.

         3              MR. WATKINS:  -- as opposed to rents on a 

         4          particular apartment complex, which don't have 

         5          anything to do with traditional State revenues.

         6              COMMISSIONER GALLAGHER:  Is there anything 

         7          else outside like that, maybe some other 

         8          university bonds that are done for housing, or 

         9          anything like that, or are they --

        10              MR. WATKINS:  There's some DSO debt.  And 

        11          what I mean by that is debt of Direct Support 

        12          Organizations.

        13              COMMISSIONER GALLAGHER:  Right.

        14              MR. WATKINS:  And some examples of that --

        15              COMMISSIONER GALLAGHER:  So they're not 

        16          here either.

        17              MR. WATKINS:  And they're not in here 

        18          either.  Right.

        19              COMMISSIONER GALLAGHER:  How about the -- 

        20          how about the Comptroller's debt that is done 

        21          for --

        22              MR. WATKINS:  The master lease program 

        23          is --

        24              COMMISSIONER GALLAGHER:  That's here.

        25              MR. WATKINS:  -- included in here.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             23
                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Thanks.

         2              GOVERNOR BUSH:  Isn't there State tax 

         3          credits in some of these housing programs that 

         4          are used?  Wouldn't you include the revenue 

         5          that's secured for -- for that? 

         6              MR. WATKINS:  There are, Governor -- 

         7          there -- there is a single family housing 

         8          program which is supported by a pledge of 

         9          documentary stamp taxes in the form of a 

        10          guarantee fund is what it's called --

        11              GOVERNOR BUSH:  Didn't we do a State tax 

        12          credit though that mirrored the Federal tax 

        13          credit to try to induce more moderate and -- 

        14          and lower income housing? 

        15              MR. WATKINS:  That is a component of one of 

        16          the housing programs, yes, sir.  But it doesn't 

        17          involve -- it involves a reduction in what 

        18          would otherwise be State revenues.

        19              GOVERNOR BUSH:  So you're taking --

        20              MR. WATKINS:  -- if you understand --

        21              GOVERNOR BUSH:  -- it off --

        22              COMMISSIONER GALLAGHER:  So, yeah --

        23              GOVERNOR BUSH:  -- the top.

        24              COMMISSIONER GALLAGHER:  -- take it right 

        25          off the top. 

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         1              GOVERNOR BUSH:  Sorry.

         2              MR. WATKINS:  Right.

         3              COMMISSIONER GALLAGHER:  So it's a loan.

         4              GOVERNOR BUSH:  Hmm?

         5              COMMISSIONER GALLAGHER:  It just -- it goes 

         6          before -- it doesn't pay anything, it just 

         7          isn't there --

         8              MR. WATKINS:  Correct.

         9              COMMISSIONER GALLAGHER:  -- comes in.  

        10          Okay.

        11              MR. WATKINS:  So you can see there -- there 

        12          are a number of different hybrids.  And what 

        13          we've tried to do is distill it down to 

        14          obligations that are secured by traditional 

        15          State revenues, ignoring some of the other 

        16          quasi governmental State entities.  The 

        17          athletic association at FSU, University of 

        18          Florida, Shands Medical Center, some of those 

        19          things which are, in effect, enterprises in and 

        20          of themselves, and have their own enterprise 

        21          fund revenues to secure their debt.  So those 

        22          are not included in here.

        23              To give you a picture --

        24              GOVERNOR BUSH:  Ben, can you -- just on 

        25          this point, that's true to a point. 

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         1              In other words, if Shands secures debt with 

         2          its own source of revenue, it puts it -- it's 

         3          unsecured obligations puts pressure on the 

         4          Legislature to have to fund more and more 

         5          things. 

         6              I mean, there is -- and they do.  I mean, 

         7          we -- we have a -- we're a large investor, if 

         8          you will, and -- in Shands and many of its 

         9          programs. 

        10              Similarly, there may be many of these other 

        11          entities where there is not full faith and 

        12          credit of the -- of the State, but there is an 

        13          obligation -- we're committed to them, and if 

        14          the -- if they run into financial problems, 

        15          you know where they come.  I mean, they come to 

        16          us.

        17              MR. WATKINS:  Right.

        18              GOVERNOR BUSH:  So would it be appropriate 

        19          to not count it in this formula that we -- we 

        20          approved last year, but to -- to note it at 

        21          least? 

        22              MR. WATKINS:  Absolutely, Governor.  And -- 

        23          and one of the things I will do as a result of 

        24          this conversation, I will go back and 

        25          accumulate all of that debt to give you a sense 

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         1          of what is, in effect, an indirect contingent 

         2          obligation of the State.

         3              GOVERNOR BUSH:  And then if you do that, 

         4          we -- we -- we'll ask Senator Nelson to do the 

         5          same thing for the --

         6              COMMISSIONER GALLAGHER:  Federal --

         7              GOVERNOR BUSH:  -- Federal government --

         8              MR. WATKINS:  It wouldn't be a pretty --

         9              GOVERNOR BUSH:  And all of its -- 

        10              MR. WATKINS:  -- picture, Governor.

        11              GOVERNOR BUSH:  -- contingent debt -- then 

        12          there are so many zeros, that it'll scare us 

        13          all.

        14              COMMISSIONER GALLAGHER:  Are you -- do you 

        15          know -- do we have knowledge of all that debt? 

        16              MR. WATKINS:  Yes, sir.

        17              COMMISSIONER GALLAGHER:  So we --  

        18              MR. WATKINS:  We accumulated that -- and in 

        19          order to determine -- we don't track it, and 

        20          there's no State oversight function, because 

        21          legislatively, that's been delegated to each of 

        22          the individual institutions, and through State 

        23          law, to the boards of the direct support 

        24          organizations. 

        25              And -- so there is no State oversight 

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         1          function, but in -- in order to prepare the 

         2          Debt Affordability Study, and make a judgment 

         3          about which is State debt, and what to include 

         4          and measure, and what to exclude, because it's 

         5          appropriately an indirect contingent 

         6          obligation, and in doing a comparison to our 

         7          peer group, it would be out of line and 

         8          inconsistent with the way other states measure 

         9          their debt, we went through that exercise. 

        10              And so I -- we have a record of that.  I 

        11          just didn't include it in the information and 

        12          in the Debt Affordability Study.  But it is a 

        13          very relevant inquiry from -- from looking at 

        14          the State from a macro perspective. 

        15              And I will get --

        16              GOVERNOR BUSH:  Unless -- unless it's a 

        17          huge burden --

        18              MR. WATKINS:  -- that you --

        19              GOVERNOR BUSH:  -- it would be good to also 

        20          get a historical sense of the growth of this 

        21          semi -- or whatever you want to call it -- 

        22          the --

        23              MR. WATKINS:  Right.

        24              GOVERNOR BUSH:  -- off balance sheet debt.  

        25          Because if it's growing faster than the full 

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         1          faith and credit debt, we ought to know about 

         2          that. 

         3              I mean, it -- because --

         4              COMMISSIONER GALLAGHER:  Well, you know, an 

         5          interesting thing is that the Comptroller's 

         6          debt that he issues for financing purchases, 

         7          that all started -- I don't know, probably 

         8          20 years ago. 

         9              But it started because individual agencies 

        10          were buying things with 20, 22 percent interest 

        11          on them, making payments out of their operating 

        12          funds.  And it made a heck of a lot more sense 

        13          to borrow money at 6 percent and let them do 

        14          it, than it did for all these agencies, and it 

        15          was millions and millions of dollars being paid 

        16          in interest.

        17              GOVERNOR BUSH:  Literally.

        18              COMMISSIONER GALLAGHER:  So we were saving 

        19          a ton of money by issuing our own debt, as 

        20          opposed to letting everybody else issue the 

        21          debt.

        22              GOVERNOR BUSH:  We've talked about that, 

        23          about maybe finding ways to --

        24              COMMISSIONER GALLAGHER:  And there's 

        25          probably other things like that that we're 

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         1          doing.

         2              GOVERNOR BUSH:  Like some --

         3              COMPTROLLER MILLIGAN:  And finance other 

         4          activities, a similar approach.  And we, 

         5          in fact, talked about it a couple of weeks ago.

         6              COMMISSIONER GALLAGHER:  Either that, or 

         7          somebody's -- else is going to be financing 

         8          them for us at a higher rate than we --

         9              GOVERNOR BUSH:  Well, I mean, just to 

        10          use -- this -- this is an important subject, is 

        11          it -- we're not a capital -- the capital items 

        12          in -- in appropriations are really hard to 

        13          compete with operating expense, because they -- 

        14          they have more zeros on them, you know, and you 

        15          don't -- we don't have a capital budget yet. 

        16              So when we're doing, for example, the 

        17          project that the General and I are working hard 

        18          on, the information management system project, 

        19          it's a -- I don't know what the end result of 

        20          it is.  But the first phase is close to 

        21          50 million dollars. 

        22              We can't -- that's a lot of money to 

        23          compete with operating expenses, but it is 

        24          something that is amortized, it's going to 

        25          create savings, it -- it can be financed.

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         1              COMMISSIONER GALLAGHER:  It's got to 

         2          happen.

         3              GOVERNOR BUSH:  And if we don't do it, then 

         4          we'll probably go to the partner that will 

         5          build it, and, in effect, either they'll take a 

         6          percentage of the profit of the savings, or 

         7          they'll charge us interest that will far exceed 

         8          anything that we can get ourselves. 

         9              So you're absolutely, right, 

        10          Commissioner/Treasurer.

        11              COMPTROLLER MILLIGAN:  Well, you know, 

        12          this -- this is a -- a very important issue on 

        13          a lot of counts.  And -- and Ben and I have met 

        14          recently talking about some of the changes in 

        15          the way that we report the state of the State's 

        16          financial situation. 

        17              And it's going to have, over the next 

        18          several years, a -- a huge impact on how we 

        19          view the health of our financial status. 

        20              And -- and part of it is exactly what we've 

        21          been talking about here as part of that -- an 

        22          element of that effort now to put more focus on 

        23          what the total debt of the State is, versus 

        24          the -- the total value in the State.

        25              GOVERNOR BUSH:  And, General, one other 

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         1          element of this -- and then we'll let Ben keep 

         2          going.

         3              But the other element that has been lacking 

         4          that -- that, as you know, you're taking a lead 

         5          on that will change that is that we need to 

         6          know what our assets are, too.

         7              COMPTROLLER MILLIGAN:  I -- exactly.

         8              GOVERNOR BUSH:  Not just our debt.  And -- 

         9          and how we manage the maturity of those assets, 

        10          compared to the debt, and all that.  We just 

        11          don't have the -- I mean, we've got -- we don't 

        12          have the --

        13              COMPTROLLER MILLIGAN:  That's the -- that's 

        14          the whole bag that we're faced with. 

        15              GOVERNOR BUSH:  All that --

        16              COMPTROLLER MILLIGAN:  And it's a healthy 

        17          way of doing business.  But -- and -- and we'll 

        18          see where it leads. 

        19              As kind of an aside, we're going to take 

        20          this year's financial report, using the 

        21          traditional way of preparing it, and then we're 

        22          going to prepare it the way we're going to have 

        23          to prepare it in the future and -- and try to 

        24          get a handle on what the real impact is.

        25              GOVERNOR BUSH:  Is that for June 30th, 

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         1          2001, or will that be --

         2              COMPTROLLER MILLIGAN:  No. 

         3              GOVERNOR BUSH:  -- December?

         4              COMPTROLLER MILLIGAN:  That -- we're going 

         5          to take this one that is just ending this 

         6          June 30th --

         7              GOVERNOR BUSH:  2000.

         8              COMPTROLLER MILLIGAN:  -- and the CAFR, 

         9          which will be put out I think in -- sometime 

        10          December, I don't know the exact date.  And 

        11          then we're going to take it though and reassess 

        12          it, using the new way that we have to view our 

        13          assets and our -- and our --

        14              COMMISSIONER GALLAGHER:  Well --

        15              COMPTROLLER MILLIGAN:  -- debt.

        16              COMMISSIONER GALLAGHER:  -- just to throw 

        17          one other thing on, I doubt very much that we 

        18          yet -- and I know they started ten or 

        19          twelve years ago -- that we yet know all the 

        20          land that we own, and where it all is.

        21              COMPTROLLER MILLIGAN:  That -- that has 

        22          been a problem certainly since I've been here, 

        23          and we don't really know.  But we're working 

        24          hard at it, and --

        25              COMMISSIONER GALLAGHER:  They had a project 

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         1          at FSU I know 12 years ago they started, and 

         2          I -- I gath-- I doubt they've finished it would 

         3          be my guess.

         4              COMPTROLLER MILLIGAN:  They're still 

         5          working on it, Tom.

         6              COMMISSIONER GALLAGHER:  I don't doubt it.  

         7          So --

         8              COMPTROLLER MILLIGAN:  We'll get there.  

         9          But that's an important element of --

        10              COMMISSIONER GALLAGHER:  Sure.

        11              COMPTROLLER MILLIGAN:  -- the way --

        12              GOVERNOR BUSH:  That's --

        13              COMPTROLLER MILLIGAN:  -- we have to report 

        14          in the future.

        15              MR. WATKINS:  Well, we don't have all the 

        16          pieces to the puzzle yet.  But we do on the 

        17          debt side of the equation.  So the asset side 

        18          of the equation is coming so that we'll 

        19          ultimately have all of the pieces of the 

        20          puzzle, and have a complete picture of the 

        21          State's financial position.

        22              COMMISSIONER GALLAGHER:  You always know 

        23          the debt side, because somebody's expecting you 

        24          to make the payments.

        25              MR. WATKINS:  Funny thing about that.

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         1              You can see this gives you a snapshot of 

         2          the total debt -- total State debt outstanding 

         3          at June 30, 2000, and it's 18 billion dollars.  

         4          And it gives a picture of what programmat-- 

         5          programmatic areas had been funded with the 

         6          total debt that's currently outstanding; with 

         7          the vast majority, over half, being made up of 

         8          funding educational facilities.

         9              When we look -- when we talk about total 

        10          debt outstanding, it's important to look at it 

        11          in -- in -- over a period of time.  And 

        12          ten years is a reasonable period of time to 

        13          look at that. 

        14              So we -- we look at the trend in increasing 

        15          debt over the last ten years, and you can see 

        16          that there's been a dramatic increase in the 

        17          total amount of debt outstanding. 

        18              And, in fact, we've more than tripled the 

        19          amount of debt outstanding we have in the last 

        20          ten years.  And that trend continued in the 

        21          year 2000 with an increase of about 1.1 to 

        22          1.2 billion dollars. 

        23              But it's important to note that that is 

        24          reasonably consistent with the year over year 

        25          increases over the past ten years.  So it's a 

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         1          continuing trend, and not an aberration.

         2              GOVERNOR BUSH:  Well, that's encouraging.  

         3          So the next ten years, if we do it again, what 

         4          will be the debt level?

         5              MR. WATKINS:  Significantly higher than it 

         6          is now --

         7              COMMISSIONER GALLAGHER:  Thirty-six --

         8              MR. WATKINS:  -- Governor.

         9              COMMISSIONER GALLAGHER:  -- billion.

        10              GOVERNOR BUSH:  Yeah.  Triple times -- 

        11          I mean --

        12              COMMISSIONER GALLAGHER:  Thirty-six 

        13          billion.

        14              MR. WATKINS:  About --

        15              GOVERNOR BUSH:  There's a point where --

        16              COMMISSIONER GALLAGHER:  But -- but the 

        17          end -- but what -- but we've also had increased 

        18          revenues --

        19              GOVERNOR BUSH:  So it may not be what we 

        20          want.

        21              MR. WATKINS:  Right.

        22              COMMISSIONER GALLAGHER:  But you've got the 

        23          increased revenues to cover this over the 

        24          years, so it's --

        25              GOVERNOR BUSH:  So far.

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         1              COMMISSIONER GALLAGHER:  -- balance.

         2              MR. WATKINS:  The next thing that's 

         3          important to evaluate is what impact the 

         4          increased debt capacity has on an -- on our 

         5          annual payment obligation.  And so -- which is 

         6          very important from a budgetary perspective, 

         7          because it measures how much of our State 

         8          budget is devoted to paying off debt before we 

         9          provide for the multitude of other services 

        10          necessary.

        11              And the annual debt service payments have 

        12          also more than tripled, mirroring the increase 

        13          in total debt outstanding. 

        14              So our annual payment obligation associated 

        15          with debt is approximately 1.2 billion dollars 

        16          currently.

        17              Now we focus on the changes in debt that 

        18          have occurred over the last year.

        19              COMMISSIONER GALLAGHER:  Ben, just one 

        20          second.

        21              MR. WATKINS:  Sure.

        22              COMMISSIONER GALLAGHER:  If you got it at 

        23          1.2, that's a -- that's a touch more than 

        24          2 percent of the total State budget.  So in the 

        25          scheme of things, that's not a --

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         1              GOVERNOR BUSH:  Well, that's --

         2              COMMISSIONER GALLAGHER:  -- tremendous 

         3          amount.

         4              GOVERNOR BUSH:  -- that's the -- you're -- 

         5          you're counting monies that -- you're counting 

         6          Federal transfers, you're counting non-general 

         7          revenue sources. 

         8              It -- I think the better way to look at it 

         9          is that most of this comes from general revenue 

        10          dollars in some fashion, and it -- to put it in 

        11          perspective, we're going to have about a 

        12          billion two increase in general revenue for 

        13          this -- for this -- year-to-year. 

        14              And so, you know, over time, it does begin 

        15          to constrain our ability to -- to meet current 

        16          needs.

        17              Now, the other side of this, which I -- I'm 

        18          very encouraged by, is we're investing in 

        19          long-term things --

        20              COMMISSIONER GALLAGHER:  Right.

        21              GOVERNOR BUSH:  -- which is what government 

        22          used to do, and now it spends more on operating 

        23          current obligations. 

        24              And -- and if you look at -- I bet if you 

        25          looked at the budget in 19-- may not -- we may 

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         1          not have indebted ourselves, we may have just 

         2          put cash down. 

         3              But I bet you would have found that the 

         4          capital investment of State government a 

         5          generation ago and two generations ago was 

         6          significantly higher as a percentage of our 

         7          budget than it is today.

         8              COMMISSIONER GALLAGHER:  Right.  Because 

         9          they didn't have any debt.  I mean -- 

        10              GOVERNOR BUSH:  Well --

        11              COMMISSIONER GALLAGHER:  -- the only thing 

        12          we could do with debt was education --

        13              GOVERNOR BUSH:  Government built --

        14              COMMISSIONER GALLAGHER:  -- at that time.

        15              GOVERNOR BUSH:  -- roads and built --

        16              COMPTROLLER MILLIGAN:  Yeah.

        17              GOVERNOR BUSH:  -- things.

        18              COMMISSIONER GALLAGHER:  With cash.

        19              COMPTROLLER MILLIGAN:  Right.

        20              COMMISSIONER GALLAGHER:  With cash.

        21              GOVERNOR BUSH:  Didn't -- didn't fund 

        22          programs.

        23              COMMISSIONER GALLAGHER:  But the Feds are 

        24          about to let us use their funding for debt 

        25          payment, which means we can speed up some of 

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         1          the transportation needs at least that are out 

         2          there.

         3              GOVERNOR BUSH:  Yeah.

         4              MR. WATKINS:  Well, I -- the debt ratio -- 

         5          a benchmark debt ratio that we use to measure 

         6          all this by is exactly what you all are getting 

         7          at. 

         8              I mean, basically what it takes is it 

         9          strips out all of the -- the revenues, funding 

        10          government programs, the Medicare, the 

        11          Medicaid, things like that, that are not 

        12          available to pay debt service. 

        13              And what it does, it looks at GR, and it 

        14          adds all the dedicated revenue streams securing 

        15          these financing programs to come up with the 

        16          revenues available --

        17              COMMISSIONER GALLAGHER:  It's some 

        18          percent --

        19              MR. WATKINS:  -- to pay debt service --

        20              COMMISSIONER GALLAGHER:  So that's why you 

        21          get up to 6 percent.

        22              MR. WATKINS:  Correct. 

        23              And then we measure against that what our 

        24          annual debt service payment obligation is.  So 

        25          we're -- you're directly on point in that 

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         1          the rev-- the -- the benchmark ratio that we 

         2          designated is exactly what you all are talking 

         3          about.

         4              In looking at the growth and debt 

         5          outstanding for the fiscal year 2000, we've 

         6          increased from approximately 16.8 billion 

         7          dollars to 17.9 billion dollars, or roughly a 

         8          1.1 billion dollar increase over the last year.

         9              And the largest part of that increase, 

        10          approximately 700 million, is attributable to 

        11          education.

        12              So it's our annual issuance of PECO, and 

        13          it's the continued implementation of the 

        14          Lottery Revenue Bond Program, which are the -- 

        15          authorized in 1998, which is a two-and-a-half 

        16          billion dollar program to finance school 

        17          construction at the local level.

        18              So nothing surprising in terms of a change 

        19          in debt over the last year.

        20              One factor that's not directly related to 

        21          debt, but critically important from a credit 

        22          analysis standpoint, is our level of reserves.  

        23          And the way that this is measured by rating 

        24          agencies, analysts, and others, is the 

        25          percentage of our reserves as a -- as a 

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         1          percentage of general revenues.

         2              And it's a -- in effect, a barometer of 

         3          financial flexibility.  And our general fund 

         4          balance has now increased to slightly more than 

         5          a billion dollars, or 12 percent of our general 

         6          revenues.  And the increase over the last 

         7          ten years is primarily attributable to a 

         8          constitutionally --

         9              (Attorney General Butterworth exited the 

        10          room.)

        11              MR. WATKINS:  -- mandated budget 

        12          stabilization fund. 

        13              So over the last year, we now have a fully 

        14          funded budget stabilization fund of about 

        15          850 million dollars, which provides a cushion 

        16          against downturns in the economy, and is a very 

        17          important factor for maintaining the State's AA 

        18          credit rating.

        19              GOVERNOR BUSH:  Let the record show that 

        20          the Governor has some role in this, too, with 

        21          his last whack at the budget.

        22              MR. WATKINS:  The Governor's veto message 

        23          always falls to the bottom line, and where it 

        24          falls to is in our level of general fund 

        25          balances.

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         1              GOVERNOR BUSH:  What about the -- the 

         2          Lawton Chiles Endowment?  Is that -- you don't 

         3          include that as a reserve.

         4              MR. WATKINS:  No, we do not.  There are 

         5          other trust funds, Governor.  This just 

         6          measures, in effect, reserves against GR, and 

         7          ignores all of the other trust fund balances, 

         8          which are dedicated to specific --

         9              GOVERNOR BUSH:  But when you go talk --

        10              MR. WATKINS:  -- programs --

        11              GOVERNOR BUSH:  -- to the New York suits, 

        12          you know, about our credit rating, I hope that 

        13          you make the point that we do have -- beyond 

        14          the statutory reserves that are the traditional 

        15          means of measuring this, we have a 1.8 billion 

        16          dollar reserve that the Legislature wisely put 

        17          into an endowment, rather than spend, which was 

        18          something that provides further protection.

        19              MR. WATKINS:  We continue to emphasize 

        20          that, Governor.

        21              GOVERNOR BUSH:  Good.

        22              COMPTROLLER MILLIGAN:  They -- they're well 

        23          aware of it.

        24              COMMISSIONER GALLAGHER:  And there's other 

        25          trust funds, too, that you could include in 

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         1          that.

         2              GOVERNOR BUSH:  Not that big.

         3              COMMISSIONER GALLAGHER:  No, nothing that 

         4          big.  If they are, you'd have spent them.

         5              MR. WATKINS:  Now we get into the heart of 

         6          the debt affordability analysis.  And what 

         7          I mean by that is we're reflecting --

         8              (Attorney General Butterworth entered the 

         9          room.)

        10              MR. WATKINS:  -- change in projections that 

        11          we provided for last year.  And what this chart 

        12          does is to detail by program our expected debt 

        13          issuance over the next ten years. 

        14              And what you can see is that we've gone 

        15          from debt issuance of 9 billion dollars over 

        16          the next ten years, to 9.9 billion dollars over 

        17          the -- expected over the next ten years. 

        18              So we have a 900 million dollar increase, 

        19          or roughly 10 percent of last year's 

        20          projections, that are the best available 

        21          estimates.

        22              And -- and those increases are attributable 

        23          to three things:  One is an increased 

        24          deployment of advanced purchase of -- 

        25          right-of-way for transportation in connection 

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         1          with bringing on additional transportation 

         2          projects, faster accelerating those projects. 

         3              The other is a transportation program that 

         4          was approved two years ago which has not been 

         5          deployed by the Department.  And that is what 

         6          we refer to as a GARVEE Bond Program which 

         7          comes on in fiscal year 2006, which is 

         8          leveraging for the first time our Federal 

         9          revenue sharing dollars which resulted from a 

        10          change in -- in Federal law. 

        11              And lastly is one additional year of PECO 

        12          bond issuance out in 2010.

        13              The important thing to note on this 

        14          expected debt issuance over the next ten years 

        15          is it does not include anything for some major 

        16          capital challenges facing the State.  And the 

        17          two that I can identify right off the bat are 

        18          Everglades restoration, and the constitutional 

        19          amendment for high speed rail.

        20              And obviously they have not been reflected 

        21          in this because there has been no legislatively 

        22          formulated game plan for those major projects.

        23              Ten-year projection of revenues --

        24              COMPTROLLER MILLIGAN:  That -- that quieted 

        25          the crowd.

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         1              SECRETARY HARRIS:  Yeah.

         2              GOVERNOR BUSH:  Well, I don't think we're 

         3          counting on -- are we -- the Everglades, has 

         4          there --

         5              MR. WATKINS:  No, sir.

         6              GOVERNOR BUSH:  -- has there been a -- 

         7          we're -- I don't -- 

         8              MR. WATKINS:  We used GR last year.

         9              GOVERNOR BUSH:  Yeah.  And that's -- my 

        10          hope is, we'll continue to do it.

        11              High speed rail's another matter.

        12              COMMISSIONER GALLAGHER:  That will be a fun 

        13          one.

        14              MR. WATKINS:  I wanted to put those on the 

        15          radar screen, Governor, because legislatively, 

        16          there will be pressure to borrow the money to 

        17          pay for those types of projects.

        18              COMMISSIONER GALLAGHER:  Like -- like 

        19          nobody knew about those.

        20              GOVERNOR BUSH:  Right.

        21              COMPTROLLER MILLIGAN:  No.  I -- Ben, 

        22          I think it's probably correct to say also that 

        23          this -- that your projection here is based on a 

        24          plan -- at least on the -- on the 

        25          transportation side that really may not be 

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         1          executable. 

         2              So there is, you know, some -- some 

         3          challenges in -- in terms of how accurate this 

         4          really is --

         5              GOVERNOR BUSH:  We won't be able to get the 

         6          concrete into the ground?

         7              COMPTROLLER MILLIGAN:  That's right.  You 

         8          just can't hire the resources to -- to do what 

         9          you want to do.

        10              COMMISSIONER GALLAGHER:  But it's a good 

        11          business to be in right now.

        12              COMPTROLLER MILLIGAN:  Well, sure.

        13              COMMISSIONER GALLAGHER:  Road building.

        14              GOVERNOR BUSH:  Asphalt in the ground.

        15              SECRETARY HARRIS:  Yeah.

        16              COMPTROLLER MILLIGAN:  Whatever.

        17              MR. WATKINS:  Especially on the 

        18          transportation programs, General, the 

        19          projections are definitely fluid.  On some 

        20          programs, like Florida Forever, for example, 

        21          which is a successor to the Preservation 2000, 

        22          it's 300 million a year --

        23              COMPTROLLER MILLIGAN:  Yeah.

        24              MR. WATKINS:  -- whether we need it or not.

        25              COMMISSIONER GALLAGHER:  And -- and we'd -- 

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         1          we'd figure out how to spend it, even though we 

         2          might spend more than we should, we --

         3              MR. WATKINS:  Right.

         4              COMMISSIONER GALLAGHER:  -- we'd get it 

         5          spent.

         6              MR. WATKINS:  The ten-year projection on 

         7          revenues.  The red line shows you what the 

         8          projections were at the end of last year.  The 

         9          blue line shows you what the -- the most 

        10          current revenue estimates, the fall revenue 

        11          estimating conference numbers show. 

        12              And these are the same Revenue Estimating 

        13          Conference numbers used in connection with the 

        14          Governor -- preparation of the Governor's 

        15          budget recommendations.  They will be updated 

        16          in the spring.

        17              The latest estimates for 2001 show an 

        18          830 million dollar increase in general revenues 

        19          over last year's.

        20              So you can --

        21              COMPTROLLER MILLIGAN:  Ben --

        22              MR. WATKINS:  -- see --

        23              COMPTROLLER MILLIGAN:  -- Ben, not really 

        24          displayed here, and I think an important aspect 

        25          of what you're talking about is the growth rate 

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         1          that this assumes.  And, as I recall, it's 

         2          somewhere six plus percent. 

         3              MR. WATKINS:  On --

         4              COMPTROLLER MILLIGAN:  Is that correct? 

         5              MR. WATKINS:  -- on an average basis, 

         6          General, about six-and-a-half percent.  On a 

         7          compound annual basis, about five-and-a-half 

         8          percent. 

         9              So last year's long run forecast assumed a 

        10          4.38 percent annual compound growth rate.  And 

        11          this year's projections include a 5.54 percent 

        12          compound annual growth rate for the long run 

        13          forecast.

        14              COMPTROLLER MILLIGAN:  Okay. 

        15              MR. WATKINS:  So slightly less than what we 

        16          talked about yesterday.  I did it in --

        17              COMPTROLLER MILLIGAN:  Okay.

        18              MR. WATKINS:  -- simple terms.  But in 

        19          compound terms, five-and-a-half percent.

        20              COMPTROLLER MILLIGAN:  Okay. 

        21              MR. WATKINS:  So we've gone from 4.4 to 

        22          five-and-a-half.

        23              The bottom line is, it's a more optimistic 

        24          revenue scenario on the -- 

        25              COMPTROLLER MILLIGAN:  Well, it's a -- 

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         1              MR. WATKINS:  -- long run forecast.

         2              COMPTROLLER MILLIGAN:  Yeah.  It's 

         3          important though, I think to -- to have that 

         4          number kind of in your head when you look at 

         5          the long run projection of the debt level.

         6              GOVERNOR BUSH:  That's growing faster than 

         7          the revenue.

         8              COMPTROLLER MILLIGAN:  Yes, sir.

         9              COMMISSIONER GALLAGHER:  Well, there's a 

        10          turnaround period in 2004 it looks like.

        11              MR. WATKINS:  2004 is really where we add 

        12          the Federal revenue sharing for the GARVEE --

        13              COMMISSIONER GALLAGHER:  That's -- 

        14              MR. WATKINS:  -- Bond Program.  So that -- 

        15          we get a one-time step up in revenues available 

        16          to pay debt service.

        17              The next thing --

        18              GOVERNOR BUSH:  Just to --

        19              MR. WATKINS:  -- we looked at --

        20              GOVERNOR BUSH:  -- just to point -- just 

        21          now to take the -- the less optimistic side of 

        22          this, there's no factoring in of any erosion of 

        23          our sales tax base because of the e-commerce 

        24          potential having impact on this? 

        25              If you talk to most economists today, and 

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         1          if you look at our -- the revenue estimating 

         2          numbers, people believe that higher energy 

         3          costs are going to slow down our economy, we're 

         4          going to see less robust growth this next year 

         5          than --

         6              COMMISSIONER GALLAGHER:  But you don't --

         7              GOVERNOR BUSH:  -- in the last --

         8              COMMISSIONER GALLAGHER:  -- think any of 

         9          that's taken into consideration by the revenue 

        10          estimating guys? 

        11              GOVERNOR BUSH:  Well, the eight -- 

        12          830 million is.  It's not a big number.  It's 

        13          not as much as it was the last year is my 

        14          point. 

        15              And -- and all of these numbers will 

        16          dramatically impact the percentage, the -- 

        17          you know, because of the leveraging aspects of 

        18          this.  Is that right? 

        19              I mean --

        20              MR. WATKINS:  Absolutely.

        21              GOVERNOR BUSH:  To project ten years out --

        22              MR. WATKINS:  You -- you have to squint.  

        23          Things get a little fuzzy when you get that far 

        24          out.

        25              GOVERNOR BUSH:  It's fuzzy math.

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         1              COMPTROLLER MILLIGAN:  Fuzzy math.  Yes.  

         2          We --

         3              COMMISSIONER GALLAGHER:  Fuzzy everything 

         4          nowadays.

         5              COMPTROLLER MILLIGAN:  Yes.

         6              MR. WATKINS:  What we've done is taken 

         7          those two different revised projections, both 

         8          the revised projections on expected debt 

         9          issuance for the next ten years, and our 

        10          long-run revenue forecast, and we've integrated 

        11          those in calculating the change in our 

        12          benchmark debt ratio -- ratio. 

        13              And -- and this is where the -- where the 

        14          revised projections are integrated.

        15              The red line shows historically up through 

        16          2000 what -- what our debt ratio is, debt 

        17          service to revenues.  The -- and the remainder 

        18          of the red line shows the last year's 

        19          projection. 

        20              And then against that, we lay over the blue 

        21          line, which is the current revised projected 

        22          benchmark debt ratio. 

        23              And so what you see is that we have a 

        24          slight improvement in our debt position, which 

        25          is the result of -- even though we've got an 

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         1          increase in debt of 1.2 billion dollars, and 

         2          we've got an additional 900 million dollars in 

         3          future expected debt issuance, because of the 

         4          increase in revenue projections, we have a 

         5          slight improvement in our debt position. 

         6              But it's --

         7              GOVERNOR BUSH:  And what is --

         8              MR. WATKINS:  -- important to note that 

         9          even with that improvement, when we look at 

        10          ourselves in relation to our ten-state 

        11          peer group, we're still second highest only 

        12          behind New York. 

        13              So in relative terms, relative to our 

        14          peer group and national medians, we are high.  

        15          In relation to our benchmark target, we still 

        16          exceed the target, only by slightly less than 

        17          what we had projected last year, and slightly 

        18          later than -- because we don't exceed it until 

        19          2003.

        20              GOVERNOR BUSH:  What -- what is the tobacco 

        21          securitization -- I don't know where we stand 

        22          on that.  But what impact would that have on 

        23          this? 

        24              MR. WATKINS:  Governor, it is -- we don't 

        25          include that in this analysis, and the reason 

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         1          being is that it's secured by a nontraditional 

         2          State revenue stream, and we're saving the 

         3          proceeds.  We're not spending them.  We're 

         4          putting them in the endowment fund. 

         5              And so from a net debt standpoint, my 

         6          expectation would be that they would not be 

         7          included in this analysis.  But we can 

         8          certainly run them through.

         9              GOVERNOR BUSH:  Well, I mean, you got debt 

        10          service at the beginning.  I would assume that 

        11          the securitization has the State on the hook 

        12          on --

        13              MR. WATKINS:  It's --

        14              GOVERNOR BUSH:  -- a net basis --

        15              MR. WATKINS:  -- it's actually being sold 

        16          as nonrecourse --

        17              COMMISSIONER GALLAGHER:  Yeah.  No 

        18          recourse.

        19              MR. WATKINS:  -- because the whole strategy 

        20          would be -- is a --

        21              GOVERNOR BUSH:  We're not going to have --

        22              MR. WATKINS:  -- risk diversification 

        23          strategy.

        24              GOVERNOR BUSH:  Well, nonrecourse in terms 

        25          of our guarantee, but --

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         1              MR. WATKINS:  Right.

         2              GOVERNOR BUSH:  -- but what about setting 

         3          aside -- I mean, what is the debt service 

         4          coverage going to be?

         5              COMMISSIONER GALLAGHER:  The -- the cash 

         6          flow from the cigarette guys.

         7              GOVERNOR BUSH:  But then they're -- they're 

         8          going to require --

         9              COMMISSIONER GALLAGHER:  There's a little 

        10          excess that you --

        11              GOVERNOR BUSH:  Yeah.  A little.  I think 

        12          it might be --

        13              COMMISSIONER GALLAGHER:  Well, the excess 

        14          is what you don't put in debt.  And we've got a 

        15          tremendous bunch of excess, because they didn't 

        16          let us --

        17              COMPTROLLER MILLIGAN:  I think it needs to 

        18          be looked at, because I think you're right.  I 

        19          think it does --

        20              GOVERNOR BUSH:  I mean, if it's a debt 

        21          service coverage like Florida Forever, 

        22          for example, which I never understood why it's 

        23          so high, 1.5, isn't it, or something like that, 

        24          it's pretty secure, doc stamps --

        25              Yeah.  That's why I'll never be an 

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         1          investment banker.  I -- I just don't see how 

         2          they -- they think about these things.  And 

         3          we -- I think we get -- we get the shaft a 

         4          little bit up there.

         5              But if -- if there's a debt service 

         6          coverage that lessens our future revenue to be 

         7          able to be spent on some of this debt, it's 

         8          a -- it's something that needs to be factored 

         9          in, right?

        10              MR. WATKINS:  Right.

        11              GOVERNOR BUSH:  Am I missing --

        12              MR. WATKINS:  No.  Absolu-- you're 

        13          absolutely right. 

        14              And my point was, we haven't measured -- we 

        15          haven't included the tobacco settlement 

        16          revenues in the revenue side of the equation.  

        17          And so in order to properly analyze it, we 

        18          would bring the revenues on, as well as the 

        19          debt service payment obligation. 

        20              But your point is --

        21              COMMISSIONER GALLAGHER:  You've got to 

        22          get --

        23              MR. WATKINS:  -- there would be a --

        24              COMMISSIONER GALLAGHER:  -- drop --

        25              MR. WATKINS:  -- higher leverage factor 

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         1          than what's included in this ratio; and so, 

         2          therefore, it would push it up. 

         3              It would have the effect of pushing it up, 

         4          simply because the leverage factor would be --

         5              COMMISSIONER GALLAGHER:  Right.

         6              MR. WATKINS:  -- greater on that particular 

         7          revenue stream than the roughly 6 percent that 

         8          we're -- that we're currently reflecting here.

         9              COMMISSIONER GALLAGHER:  It -- it -- but we 

        10          only -- we only -- the Legislature only allowed 

        11          us to do a certain percentage of it. 

        12              And if you took the total cash flow 

        13          projected, not just the part that's there for 

        14          the debt, I think you're not going to be --

        15              GOVERNOR BUSH:  You're right.

        16              COMMISSIONER GALLAGHER:  -- gone too far 

        17          off.

        18              GOVERNOR BUSH:  You're probably --

        19              COMMISSIONER GALLAGHER:  There's a 

        20          tremendous amount coming in that we weren't 

        21          allowed to securitize.

        22              MR. WATKINS:  Well, and you have to 

        23          remember, it's all in relative terms, too.  In 

        24          other words, we've already got a 1.2 billion 

        25          dollar base.  I mean, that's our annual debt 

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         1          service payment obligation from now for the 

         2          next ten years. 

         3              And so we're adding marginally to that.   

         4          And so it will have some impact, but probably 

         5          not dramatic. 

         6              But we would run that through this same 

         7          analysis in order to measure the impact of 

         8          that.

         9              The last step in the process from a debt 

        10          affordability standpoint is to measure our 

        11          available debt capacity based on our 6 percent 

        12          target benchmark debt ratio. 

        13              So what we do -- the way this analysis 

        14          works is you calculate the total capacity 

        15          available, devoting 6 percent of your revenues 

        16          to paying debt service. 

        17              And then you reduce that for the 

        18          9.9 billion dollars in expected issuance we see 

        19          over the next ten years, and that leaves us 

        20          with our estimated available capacity that has 

        21          not been committed.

        22              And what that shows us is that our future 

        23          bonding capacity available increased 

        24          approximately 2 billion dollars, from 

        25          3.3 billion, to 5.3 billion. 

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         1              And that is directly attributable to the 

         2          more optimistic, long-run revenue forecast.

         3              And you may look at this and say, well, 

         4          great, there's -- there's plenty of room for 

         5          new debt.  But -- but that's not so, because 

         6          it's important to understand that, first off, 

         7          the capacity is available incrementally over 

         8          the next ten years.  It's not available all at 

         9          once. 

        10              And as you can see from this chart, none of 

        11          that capacity is available until 2003.

        12              And the other important thing to realize 

        13          is, once you've committed that debt capacity, 

        14          it's gone for the next 20 years.  You only get 

        15          to use it once. 

        16              And so I would submit to you, the most 

        17          prudent way to look at this is this capacity 

        18          should be viewed as simply a reserve against 

        19          future potential downturns in the economy.  

        20          Because just as you've seen, a more optimistic 

        21          long-run revenue forecast increased our 

        22          capacity by 2 billion dollars; a drop in our 

        23          future expected revenues, that debt capacity 

        24          will just as quickly evaporate.

        25              GOVERNOR BUSH:  So -- so, Ben, if -- if -- 

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         1          if I was to say that if someone came up with an 

         2          interesting idea to securitize the Everglades 

         3          commitment to increase the GARVEE Bond 

         4          capacity, which there was efforts -- we kind of 

         5          restrained that a bit -- or came up with a new 

         6          fandangled way to solve a public policy problem 

         7          by using debt, that, right now, given the 

         8          revenue capacity that we have, we would have a 

         9          very difficult time doing it. 

        10              In keeping within the 6 percent range, 

        11          which is a prudent --

        12              MR. WATKINS:  Correct.

        13              GOVERNOR BUSH:  -- guide to -- to maintain.

        14              COMMISSIONER GALLAGHER:  Or at least until 

        15          2003.

        16              COMPTROLLER MILLIGAN:  No.

        17              MR. WATKINS:  Until 2003, it's not 

        18          available.  After that, it's available 

        19          incrementally --

        20              GOVERNOR BUSH:  We're doing high speed 

        21          rail, you know --

        22              COMMISSIONER GALLAGHER:  Well, that's --  

        23          you only get 400 million dollars.  You're not 

        24          going to get much -- much rail built.

        25              MR. WATKINS:  Right.

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         1              COMPTROLLER MILLIGAN:  You only feel good 

         2          about that if you really accept 6 percent as 

         3          really the -- the target.  You know, you look 

         4          at our peer relationships, that green line 

         5          which happens to be on this chart, we are well 

         6          above -- that's on the next chart -- we are 

         7          well above --

         8              GOVERNOR BUSH:  Six puts us up near 

         9          New York --

        10              COMPTROLLER MILLIGAN:  That's exactly 

        11          right.

        12              COMMISSIONER GALLAGHER:  Let me ask about 

        13          that peer group. 

        14              Are they -- does our peer group have the 

        15          same growth that we do? 

        16              MR. WATKINS:  Some do and some don't.  

        17          I think probably the -- the closest corollary 

        18          in our peer group is California. 

        19              But California has had phenomenal increase 

        20          in revenues over the last ten years, primarily 

        21          driven by their economy, and that -- and their 

        22          technology sector.  So their ratio has -- have 

        23          actually improved more dramatically than ours 

        24          over the -- over the last year. 

        25              But it's -- it's New York, New Jersey --

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         1              COMMISSIONER GALLAGHER:  Where --

         2              MR. WATKINS:  -- Pennsylvania --

         3              COMMISSIONER GALLAGHER:  -- where's 

         4          California?

         5              MR. WATKINS:  -- Ohio --

         6              COMMISSIONER GALLAGHER:  What -- what's 

         7          their -- what's their benchmark? 

         8              MR. WATKINS:  Three-and-a-half percent 

         9          in -- their actual debt ratio that we're 

        10          measuring against is roughly --

        11              COMPTROLLER MILLIGAN:  Yeah.  I'm not -- 

        12          I'm not saying 6 is wrong. 

        13              I'm just saying, you need to recognize what 

        14          6 is.  And -- and you shouldn't feel too cozy 

        15          about the fact that you may dip down below 

        16          6 percent below that.

        17              GOVERNOR BUSH:  The other -- the other 

        18          factor that we've not talked about that wasn't 

        19          part of your exercise is the local obligations 

        20          as well. 

        21              I mean, some states -- this is -- this is 

        22          not complete apple to apple comparison.  Some 

        23          states have less -- for example, I think of 

        24          those ten states, my guess is that Florida 

        25          probably is the leader in terms of State 

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         1          funding of education --

         2              MR. WATKINS:  Absolutely.

         3              GOVERNOR BUSH:  -- of capital investment.

         4              COMMISSIONER GALLAGHER:  Yeah.  So there 

         5          aren't any local capital --

         6              GOVERNOR BUSH:  And I guarantee you, we're 

         7          number one in terms of purchase of 

         8          environmentally sensitive lands.  I mean --

         9              COMMISSIONER GALLAGHER:  You can --

        10              GOVERNOR BUSH:  -- that is --

        11              COMMISSIONER GALLAGHER:  -- bet on that.

        12              GOVERNOR BUSH:  -- we're -- so those two 

        13          factors, for example, puts us in a different 

        14          position than California, which I think has a 

        15          much higher -- don't they have a high local 

        16          government indebtedness compared to maybe our 

        17          state? 

        18              MR. WATKINS:  Absolut-- because of const-- 

        19          differences in constitutions and limitations on 

        20          borrowing, some of the analysis falls apart. 

        21              So you can -- we can compare ourselves to 

        22          the ten-state peer group, but there are still 

        23          differences because of the way our debt is 

        24          structured, and the difference between local 

        25          debt and State debt.

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         1              COMMISSIONER GALLAGHER:  You'd have to make 

         2          a lot of adjustments to really show where we 

         3          are in comp-- in comparison.

         4              MR. WATKINS:  But -- but it is a reasonable 

         5          comparison to look at the -- look at the 

         6          national medium and look at our ten-state peer 

         7          group, to see on a relative basis how we stack 

         8          up.  And there are explanations about why we 

         9          are different than other people away from the 

        10          absolute amount of debt that we have 

        11          outstanding. 

        12              California is at four-and-a-half percent 

        13          last year on the benchmark debt ratio.  So they 

        14          are lower than we are.

        15              COMMISSIONER GALLAGHER:  But none -- but 

        16          they don't have the education debt we have.

        17              MR. WATKINS:  Correct.

        18              COMMISSIONER GALLAGHER:  And that's in 

        19          the -- 

        20              MR. WATKINS:  And they had more local 

        21          government debt.

        22              COMMISSIONER GALLAGHER:  And that's 

        23          62 percent of our debt.

        24              MR. WATKINS:  Right.

        25              COMMISSIONER GALLAGHER:  So if we took that 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             64
                                 November 29, 2000
         1          62 percent off, we're way lower than they are.

         2              MR. WATKINS:  Probably.

         3              GOVERNOR BUSH:  Don't suggest doing that 

         4          before --

         5              COMMISSIONER GALLAGHER:  I'm just trying to 

         6          think apples to -- 

         7              GOVERNOR BUSH:  Education Commissioners 

         8          aren't supposed to be talking that way.

         9              MR. WATKINS:  You're Treasurer now, right? 

        10              COMMISSIONER GALLAGHER:  January 3rd, 

        11          thank you.

        12              GOVERNOR BUSH:  He's transitioning.

        13              MR. WATKINS:  In conclusion, the highlights 

        14          of this analysis are that Florida's debt 

        15          continues to increase at approximately the same 

        16          rate as it has over the last ten years. 

        17              Our expected debt issuances over the next 

        18          ten years has increased about 10 percent, or 

        19          900 million dollars. 

        20              Even with the increase in the expected debt 

        21          issuance, and the est-- the estimated debt 

        22          capacity available has increased about 

        23          2 billion dollars, from 3.3 billion, to 

        24          5.3 billion. 

        25              The increase in future debt capacity is due 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             DIVISION OF BOND FINANCE             65
                                 November 29, 2000
         1          to the increase in revenue estimates.  

         2          Florida's debt position has improved slightly 

         3          over last year, as measured by our benchmark 

         4          debt ratio. 

         5              And Florida's debt is considered moderate 

         6          and manageable at its current level.

         7              GOVERNOR BUSH:  I think we've thoroughly 

         8          discussed this.  Is there a -- do you need a 

         9          motion for acceptance or anything, or just -- 

        10          this is just a report.

        11              MR. WATKINS:  For information.

        12              GOVERNOR BUSH:  Thank you.

        13              MR. WATKINS:  Thank you.

        14              GOVERNOR BUSH:  Well done.  

        15              (The Division of Bond Finance Agenda was 

        16          concluded.)

        17                              *   *   *









                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         66
                                 November 29, 2000
         1              GOVERNOR BUSH:  Veterans' Affairs.

         2              COMMISSIONER GALLAGHER:  Motion on the 

         3          minutes.

         4              GOVERNOR BUSH:  Colonel, how are you doing? 

         5              ATTORNEY GENERAL BUTTERWORTH:  Second.

         6              MS. HIGGINS:  I'm doing well, sir. 

         7              How are you this morning, Governor and 

         8          Cabinet?

         9              GOVERNOR BUSH:  There's a motion on the 

        10          minutes, and a second. 

        11              Without objection, it's approved.

        12              MS. HIGGINS:  My second order is approval 

        13          on the quarterly report for the first quarter 

        14          of 2000-2001 fiscal year.

        15              COMMISSIONER GALLAGHER:  Motion.

        16              ATTORNEY GENERAL BUTTERWORTH:  Second.

        17              GOVERNOR BUSH:  Moved and seconded.

        18              Without objection, it's approved.

        19              MS. HIGGINS:  The third issue is one that I 

        20          thought I'd prepare for --

        21              (Treasurer Nelson exited the room.)

        22              MS. HIGGINS:  -- for information.  Many of 

        23          you have expressed a -- a lot of interest in -- 

        24          in this issue, and there has been a new 

        25          development since I last appeared before you at 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         67
                                 November 29, 2000
         1          the Panama City Cabinet meeting. 

         2              So I thought I'd brief you a little bit 

         3          about where we've come, and where we are on the 

         4          new national cemetery for south Florida issue.

         5              As you know, and as I briefed --

         6              (Governor Bush exited the room.)

         7              MS. HIGGINS:  -- before, south Florida's 

         8          been on the VA's list of highest priorities for 

         9          a new national cemetery since 1987, based on 

        10          its large underserved veterans population.  

        11          That's been 13 years it's been on the VA's 

        12          list.

        13              The ten counties that could be served by a 

        14          new national cemetery in south Florida have 

        15          about a half million veterans.  A staggering 

        16          48 percent of them are over the age of 

        17          sixty-five, including my own father and 

        18          several -- several uncles who live down there, 

        19          all of whom served in World War II.

        20              Upon coming to this Department almost 

        21          two years ago, and learning of this situation, 

        22          I vowed to make this one of my Department's 

        23          highest priorities.

        24              To this end, I testified before a 

        25          House Veterans' Affairs subcommittee on 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         68
                                 November 29, 2000
         1          May 20th, 1999.  In January of this year, my 

         2          Department hosted a round table meeting with 

         3          staff from Florida's Department of 

         4          Environmental Protection, that's been wonderful 

         5          in this whole issue; and the National Cemetery 

         6          Administration of the U.S. Department of 

         7          Veterans' Affairs from Washington. 

         8              They came down here, and we all discussed a 

         9          strategy towards this. 

        10              And I also testified before a House 

        11          Appropriation subcommittee on VA HUD on 

        12          April 13th, 2000.

        13              Then the staff from the National Cemetery 

        14          Administration, along with members of my staff, 

        15          made visits to 12 potential sites in south 

        16          Florida during April and May.

        17              On June 19th, the Undersecretary for 

        18          Memorial Affairs of the U.S. Department of 

        19          Veterans' Affairs, Bob -- Mike Walker, was 

        20          briefed on the pros and cons of the 12 sites, 

        21          and narrowed the list down to three finalists.

        22              Then Secretary Walker, myself, and 

        23          Eva Armstrong from the Department of 

        24          Environmental Protection, on her birthday, 

        25          walked the land down in south Florida, and 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         69
                                 November 29, 2000
         1          found that two of the three sites were suitable 

         2          to develop a full new national cemetery, 

         3          offering the full range of burial options to 

         4          Florida's veterans.

         5              Both sites are within 25 miles of the focal 

         6          point as calculated by the VA, and based on 

         7          best serving the greatest veterans population 

         8          within a 75-mile radius.

         9              It's interesting to note that 13 years ago, 

        10          when this project was first identified by the 

        11          VA, the focal point of where the veterans -- 

        12          the needy veterans were, was in -- basically in 

        13          downtown Miami; and, in fact, over the years, 

        14          many people have suggested Homestead Air Force 

        15          Base, and places down there.

        16              Interestingly enough, and it's probably not 

        17          surprising to you, that over the 13 years, the 

        18          focal point has moved further northward.  And 

        19          it now is in south Palm Beach County, which is 

        20          where both of the two sites are located, in 

        21          Palm Beach County.

        22              (Treasurer Nelson entered the room.)

        23              MS. HIGGINS:  Thanks to your leadership 

        24          here, and the leadership of Governor Bush, 

        25          the -- and the support of Congressman 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         70
                                 November 29, 2000
         1          Bill Young, and the bipartisan spirit of the 

         2          entire Florida delegation, we received the 

         3          entire 15 million dollars necessary to purchase 

         4          the land for the new national cemetery.

         5              (Governor Bush entered the room.)

         6              MS. HIGGINS:  House Resolution 4635 was 

         7          passed by the U.S. House and Senate on 

         8          October 19th, 2000; and signed by the President 

         9          on October 27th, 2000.

        10              The VA has recently contracted to have 

        11          environmental impact studies completed on both 

        12          tracts of lands, and this is expected to be 

        13          completed in January of 2001.

        14              After a 30-day period for public comment 

        15          ending in late February, the VA will then begin 

        16          negotiations to purchase one of the sites.

        17              I know that Commissioner/Senator-Elect 

        18          Nelson will be a great help to us, and take a 

        19          great deal of leadership next year as we seek 

        20          the additional 15 million dollars necessary 

        21          from Congress for the actual construction of 

        22          the new national cemetery.

        23              Once the construction appropriation is 

        24          made, the VA intends to expedite preparations 

        25          for an area with which to begin burials.  And 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         71
                                 November 29, 2000
         1          if all goes well, we should be able to begin 

         2          burials in south Florida in the new national 

         3          cemetery in early 2002.

         4              I'm pleased to tell you then that the long 

         5          wait for the nearly half million veterans in 

         6          south Florida is finally coming to an end.

         7              COMPTROLLER MILLIGAN:  Good.

         8              GOVERNOR BUSH:  Fantastic, Colonel.

         9              MS. HIGGINS:  Thank you.

        10              SECRETARY HARRIS:  Governor, I'd just say, 

        11          we're really excited about the -- the war 

        12          memorial that we're working on, and have had 

        13          such pleasure -- and it's been a real privilege 

        14          to work with Colonel Higgins --

        15              MS. HIGGINS:  Oh, and same here.  I'll tell 

        16          you, just -- since you brought it up, and this 

        17          is also one of my favorite subjects, and -- and 

        18          one of yours, I know as well, and many -- many 

        19          of yours, is that we are beginning to receive 

        20          donations, we've gotten some corporate 

        21          sponsorship, we've gotten some corporate 

        22          donations and pledges. 

        23              We've turned over the beginning of some of 

        24          the money to the Department of State, and -- 

        25          and your folks, Secretary, have been wonderful 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         72
                                 November 29, 2000
         1          in turning to and supporting this project in 

         2          a -- in a great way. 

         3              They've hired a few people to start 

         4          researching those wonderful things that have 

         5          happened in the State of Florida because of 

         6          World War II so that we can begin to create our 

         7          museum, and our publication, and our 

         8          interactive website. 

         9              So I -- I'd like to pass my thanks, and the 

        10          thanks of all -- of the 600,000 World War II 

        11          veterans in this state to you; and -- and 

        12          especially to Jan Matthews and the -- and the 

        13          folks in -- in her area; and also to the 

        14          Department of Education for the educational 

        15          curriculum that they're beginning to work on as 

        16          well.

        17              SECRETARY HARRIS:  One of the things we're 

        18          working on is a heritage site, all -- a trail 

        19          all throughout the state so that it's excellent 

        20          for economic development.  In terms of telling 

        21          the story of Florida, we've found that visitors 

        22          who go to these sites from all over the world 

        23          will spend 38 percent more visiting a heritage 

        24          site than they will on leisure activities. 

        25              But, more importantly, we'll be able to 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         73
                                 November 29, 2000
         1          tell the story of how the veterans really 

         2          created much of our heritage here in Florida in 

         3          terms of when the infrastructure came in, in 

         4          terms of their contributions to their 

         5          communities once they lived here and were 

         6          working here. 

         7              So we're immensely grateful, and I believe 

         8          the heritage trail will help to tell that 

         9          story.

        10              MS. HIGGINS:  I think so as well.

        11              And the other exciting thing that people 

        12          are beginning to realize is, that because this 

        13          is a little different -- at first -- and 

        14          continuing, there's some veterans who still 

        15          want to see that rock somewhere in a park 

        16          somewhere. 

        17              But they're very excited when they realize 

        18          that the Florida Museum of History is, in fact, 

        19          part of the -- the thousands and thousands of 

        20          school children, other people who visit 

        21          Florida, part of their Tallahassee experience, 

        22          part of their Florida experience. 

        23              And they will see and learn about how 

        24          Florida and Florida citizens, and those who now 

        25          live in Florida, contribute to the -- the 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         74
                                 November 29, 2000
         1          growth of the state and, indeed, the growth of 

         2          the country during World War II as part of 

         3          their experience in -- when they visit Florida.  

         4          So we're all very excited about where we're 

         5          going on this.

         6              GOVERNOR BUSH:  You know, there's, like, 

         7          four or five large things that have happened in 

         8          the last 50 years in our state that has 

         9          transformed Florida.  One of them is clearly 

        10          the World War II generation, and the investment 

        11          that people made in this state, and people 

        12          staying here to build the new Florida.

        13              I guess probably the space program's 

        14          another, Disney is another. 

        15              I would think that the struggle against 

        16          discrimination and the fight that 

        17          Governor LeRoy Collins did, and others, of that 

        18          generation, to move Florida away from being 

        19          a -- a southern state to a progressive 

        20          industrial state would be another.

        21              But this is a big factor in -- and then the 

        22          immigration from -- that we're blessed to have 

        23          from -- from the south and east of us.

        24              And I -- this is -- this is one of those 

        25          large things that -- that really has 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         75
                                 November 29, 2000
         1          transformed our state.  And I -- I hope over 

         2          the next year that we pay tribute to this 

         3          generation, because they're not going to be 

         4          around much longer. 

         5              MS. HIGGINS:  Uh-hum.

         6              GOVERNOR BUSH:  And it's appropriate to do 

         7          it in a way that is very mindful of the fact, 

         8          without -- without these folks, Florida would 

         9          be dramatically different, and not nearly as 

        10          dynamic and as good as it is.

        11              MS. HIGGINS:  Yes, sir. 

        12              Thank you.

        13              TREASURER NELSON:  Governor.

        14              GOVERNOR BUSH:  Yes.

        15              TREASURER NELSON:  Robin, what is the -- on 

        16          the map, besides the two sites, there's an 

        17          arrow that says focal point. 

        18              What does that mean? 

        19              (Secretary Harris exited the room.)

        20              MS. HIGGINS:  Well, the focal point is a -- 

        21          is really a point that the U.S. Department of 

        22          Veterans' Affairs identifies.  And they -- they 

        23          do this with their cemeteries, they do this 

        24          with their nursing homes. 

        25              And generally, it is a -- it is a circle 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         76
                                 November 29, 2000
         1          where they recognize within a 75-mile range, in 

         2          this case, where the neediest population and 

         3          the largest population exists of those who need 

         4          the cemetery. 

         5              I -- you may have been outside the -- the 

         6          room when I mentioned --

         7              GOVERNOR BUSH:  Can I --

         8              MS. HIGGINS:  -- the fact that --

         9              GOVERNOR BUSH:  Robin, can I just mention 

        10          that --  

        11              MS. HIGGINS:  Yes.

        12              GOVERNOR BUSH:  -- we've had a great group 

        13          of kids from the Community Christian School 

        14          that came in.  I made them come in.  They 

        15          didn't want to, but now they're leaving.

        16              Just say hello to them.

        17              COMPTROLLER MILLIGAN:  All right.

        18              GOVERNOR BUSH:  I -- I don't -- I waved 

        19          them in, and they felt obligated to come.  I'm 

        20          not sure they wanted to stick around.  But 

        21          anyway.

        22              MS. HIGGINS:  Hi, kids.

        23              GOVERNOR BUSH:  Excuse me, Robin.

        24              MS. HIGGINS:  Yes. 

        25              Sir, the -- so that's -- that's where they 

                        ACCURATE STENOTYPE REPORTERS, INC.

                          DEPARTMENT OF VETERANS' AFFAIRS         77
                                 November 29, 2000
         1          identify the focal point.  It's interesting 

         2          that over the 13 years that this project has 

         3          been recognized, the focal point that the VA 

         4          found was -- when originally was in south 

         5          Florida, in downtown Miami, has moved further 

         6          northward.  It is now in Palm Beach. 

         7              That's where the -- the needy gen-- the 

         8          needy population exists.  And within the -- the 

         9          ten-county areas just surrounding that focal 

        10          point, there are half a million veterans. 

        11              The -- the two specific sites that the VA 

        12          has -- has now narrowed their focus on are both 

        13          within 25 miles of the center of that focal 

        14          point. 

        15              They've asked me to kind of not be totally 

        16          specific about the sites because it's their --

        17              GOVERNOR BUSH:  Price goes up.

        18              MS. HIGGINS:  -- their prerogative, and, 

        19          of course, they don't want to drive the price 

        20          up when they finally make the -- make the 

        21          decision. 

        22              But, in fact, they're both located, as I 

        23          said, very close to the focal point.  They're 

        24          both located really within the corridor between 

        25          the Turnpike and -- and 95.  So they're 

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                          DEPARTMENT OF VETERANS' AFFAIRS         78
                                 November 29, 2000
         1          excellent locations, both of them.

         2              And as I said, they would afford the full 

         3          range of burials, and that is underground 

         4          burials, as well as columbariums.

         5              GOVERNOR BUSH:  Thank you, Robin.

         6              MS. HIGGINS:  Thank you, Governor. 

         7              (The Department of Veterans' Affairs Agenda 

         8          was concluded.)

         9                              *   *   *

















                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              79
                                 November 29, 2000
         1              GOVERNOR BUSH:  Department of Revenue.

         2              COMMISSIONER GALLAGHER:  Motion on the 

         3          minutes.

         4              ATTORNEY GENERAL BUTTERWORTH:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              Item 2.

         8              DR. ZINGALE:  Good morning.

         9              GOVERNOR BUSH:  Good morning, Dr. Z.

        10              DR. ZINGALE:  Item 2, estate tax rules.  

        11          Request approval of proposed rule amendments to 

        12          Rule 12C-3 relating to the administration of 

        13          estate tax.  These are to conform to past 

        14          legislative changes.

        15              COMMISSIONER GALLAGHER:  Motion.

        16              ATTORNEY GENERAL BUTTERWORTH:  Second.

        17              GOVERNOR BUSH:  Moved and seconded.

        18              Without objection, it's approved.

        19              DR. ZINGALE:  Item 3, documentary stamp tax 

        20          rules.  Request approval of proposed rule 

        21          amendment to Rule 12B-4, relating to the 

        22          administration of the doc stamp tax.  The rule 

        23          amendments implement statutory changes from 

        24          previous legislation.

        25              COMMISSIONER GALLAGHER:  Motion.

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              80
                                 November 29, 2000
         1              COMPTROLLER MILLIGAN:  Second.

         2              GOVERNOR BUSH:  Moved and --

         3              Was there a second? 

         4              COMPTROLLER MILLIGAN:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              DR. ZINGALE:  Property tax administration, 

         8          request approval of proposed amendment and rule 

         9          repeals to Rules 12-9, 12D-6, 12D-7, 12D-8, 

        10          12D-13, and 12D-16.  Two issues there 

        11          conforming to past legislative changes, and 

        12          some changes in our curriculum that deal with 

        13          the appraisal course.

        14              COMMISSIONER GALLAGHER:  Motion.

        15              COMPTROLLER MILLIGAN:  Second.

        16              GOVERNOR BUSH:  Moved and seconded.

        17              Without objection, it's approved.

        18              DR. ZINGALE:  We have on today's agenda our 

        19          legislative concepts to be presented to this 

        20          year's Legislature, with your permission.

        21              There are 36 legislative concepts here, 

        22          and --

        23              GOVERNOR BUSH:  What's the difference 

        24          between a concept and a --

        25              COMMISSIONER GALLAGHER:  They haven't 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              81
                                 November 29, 2000
         1          written a bill yet.

         2              GOVERNOR BUSH:  -- it's a little more 

         3          tangible.

         4              DR. ZINGALE:  I haven't written the bill 

         5          yet.  This is the normal practice, all your 

         6          Cabinet agencies.

         7              GOVERNOR BUSH:  I just -- as an aside, I 

         8          was with one of the well-known lawyers in the 

         9          other side of our life here.  And his son -- he 

        10          said -- he said that his son voted for a 

        11          concept and wrote in a concept and put a symbol 

        12          on. 

        13              That's why I was asking, because it's a 

        14          little more tangible than that, hmm? 

        15              DR. ZINGALE:  Well, we -- we'll give you 

        16          some detail on at least ten of the 36 that are 

        17          in --

        18              GOVERNOR BUSH:  All right.

        19              DR. ZINGALE:  -- front of you.

        20              In the child support area, we're putting 

        21          forth 15.  There are four of them that are 

        22          either policy directives, or things that the 

        23          staff has expressed an interest in. 

        24              The first one deals with driver's license 

        25          photos.  There are a number of occasions when 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              82
                                 November 29, 2000
         1          we deal with our non-custodial parents where 

         2          sheriffs have to serve process prior to genetic 

         3          testing, prior to going in front of the Court. 

         4              To help this process along, we are 

         5          requesting a statutory change to allow us to 

         6          include in the service of process package, the 

         7          driver's license photo so at the time of 

         8          service, there is a verification.

         9              (Secretary Harris entered the room.) 

        10              DR. ZINGALE:  We have taken ample 

        11          provisions in the law to ensure that that photo 

        12          is retained by the Department after service of 

        13          process so it can't get into the public domain.

        14              The second one deals with the written 

        15          declaration of paternity.  At the time a 

        16          custodial parent is identifying who the 

        17          potential father might be, there is a legal 

        18          statement that has to be signed acknowledging 

        19          who the father is.

        20              That statement is currently a notarized 

        21          signature requirement.  We're requesting a law 

        22          change to go through a legal sworn statement.  

        23          It does carry the weight of perjury.  It is an 

        24          acceptable practice. 

        25              By making that change, Children and Family 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              83
                                 November 29, 2000
         1          has agreed that they would consider having that 

         2          statement signed at the time that the welfare 

         3          eligibility is determined, substantially 

         4          accelerate the process, and get us more quickly 

         5          involved in establishing paternity.

         6              The third --

         7              COMMISSIONER GALLAGHER:  Before you go 

         8          there --

         9              DR. ZINGALE:  Sure.

        10              COMMISSIONER GALLAGHER:  -- why can't you 

        11          use the driver's licenses now?  They can be 

        12          used for law enforcement purposes.  Basically 

        13          you're delivering a subpoena, and that's 

        14          certainly a law enforcement purpose. 

        15              I --

        16              DR. ZINGALE:  We're --

        17              COMMISSIONER GALLAGHER:  -- I don't know 

        18          why you couldn't contract with --

        19              DR. ZINGALE:  Law enforcement can do it 

        20          already.  They do have the authority to do it 

        21          already.  Small ones. 

        22              Other ones find it an inconvenience to go 

        23          through that administrative burden.  This is 

        24          allowing us to do it for them.  It's an 

        25          expeditious thing, as opposed to a radical 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              84
                                 November 29, 2000
         1          change --

         2              COMMISSIONER GALLAGHER:  But -- but --

         3              DR. ZINGALE:  -- in what they're doing.

         4              COMMISSIONER GALLAGHER:  -- I -- I think 

         5          you could do an interagency agreement for the 

         6          delivery of the subpoenas, and -- and have 

         7          access to that.

         8              DR. ZINGALE:  You always come up with good 

         9          ones.  We'll research that. 

        10              If we could go forward with the concept, 

        11          we'll work with you on -- and see if that's 

        12          feasible.

        13              The third one deals with a noncustodial 

        14          parent with income who willfully chooses not to 

        15          pay their child support, has had that lack of 

        16          child support for over a year, and the 

        17          outstanding obligation is $5,000.

        18              Currently the statutes call for that to be 

        19          a misdemeanor.

        20              The Federal government in terms of 

        21          interstate cases has that be a third degree 

        22          misdemeanor -- a third degree felony.  

        23              The State of Florida, in terms of 

        24          abandonment of a child causes that to be a 

        25          third degree felony. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              85
                                 November 29, 2000
         1              This is a substantial ratcheting up in the 

         2          ability and -- and -- and willfulness of not 

         3          paying your child support.  We are proposing 

         4          increasing that to a third degree felony.  This 

         5          is a -- a substantial stiffening of our concern 

         6          that when you don't pay your child support, 

         7          that constitutes abandonment.

         8              Fourth, this is probably the most 

         9          controversial one we have in front of you.  It 

        10          does deal in a collaborative policy area 

        11          between us and Children and Family. 

        12              Got to give a little bit of history on 

        13          this.  This kind of traces back to welfare 

        14          prior to welfare reform.  When welfare was an 

        15          18-year entitlement under Aid to Families with 

        16          Dependent Children, over an 18-year period, 

        17          that obligation can run on the average of 

        18          $65,000, all the way up to $100,000.  A monthly 

        19          obligation carried over for 18 years. 

        20              That very large obligation and that 

        21          entitlement caused the State and Federal 

        22          government to agree that when child support 

        23          was collected for somebody on Aid to Families 

        24          with Dependent Children, the State and the 

        25          Federal government would retain that child 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              86
                                 November 29, 2000
         1          support. 

         2              The portion that the State paid for welfare 

         3          would be retained by the State, and the 

         4          proportion that was paid for by the Federal 

         5          government would be retained by the Federal 

         6          government.

         7              As welfare reform shifted that from an 

         8          18-year entitlement to a temporary assistance 

         9          payment, more of an insurance policy than a -- 

        10          than a -- an entitlement, the experience has 

        11          been that in the 24-month period, or the 

        12          36-month period, that a person will move in and 

        13          off of welfare quite frequently during that 

        14          period of time.

        15              There is a national movement.  It's being 

        16          discussed in Congress, and we want to have this 

        17          dialogue here in Florida to talk about changing 

        18          the relationship.  And instead of the State in 

        19          this temporary situation retaining its portion 

        20          of the child support, that the full child 

        21          support payment be passed on to the child 

        22          regardless of whether the mother is on welfare 

        23          or not on welfare.

        24              There is a substantial benefit to the 

        25          Department of Revenue in terms of administering 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              87
                                 November 29, 2000
         1          that.  Having to look at a case over 18 years 

         2          on a monthly basis on/off of welfare, if you 

         3          have to go in the past, there were $50 

         4          disregards.  It is a very complex formula in 

         5          terms of making that distribution.

         6              That formula caused a lot of complaints, 

         7          because we make mistake in those distributions.  

         8          We have to go through a very difficult audit 

         9          procedure every time that is in question.

        10              GOVERNOR BUSH:  Jim, how many -- what is 

        11          your -- you have a million kids that are 

        12          receiving child support.  What percentage would 

        13          be in this category of -- of delinquent --

        14              DR. ZINGALE:  What percentage would be --

        15              GOVERNOR BUSH:  -- kind of chronic --

        16              DR. ZINGALE:  -- into this --

        17              GOVERNOR BUSH:  -- delinquencies --

        18              DR. ZINGALE:  -- category -- 

        19              GOVERNOR BUSH:  -- from -- 

        20              DR. ZINGALE:  Oh.  Of those that have 

        21          support orders today, I would guess 350,000, 

        22          170,000 -- 30 percent of 170,000 would be in 

        23          that category.

        24              GOVERNOR BUSH:  Of what you're describing 

        25          right now?

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              88
                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Sixty thousand.

         2              DR. ZINGALE:  Sixty thousand.

         3              The -- the oblig-- and I'd have to check on 

         4          that.  That's top-of-the-head math.

         5              It is a -- it is a financial cost in the 

         6          short run.  What one would hope, if we were 

         7          allowed to go forward with this concept, and we 

         8          would be doing it hand-in-hand with Children 

         9          and Family, that we would be lobbying Congress 

        10          very clearly to have them pick up their cost of 

        11          the pass-through, which we're estimating is 

        12          about 10 million. 

        13              Our problem today is that there would be an 

        14          18 million dollar obligation for the State of 

        15          Florida if we would go forward and do this on 

        16          an expeditious basis --

        17              GOVERNOR BUSH:  Have you -- have you -- 

        18          knowing -- knowing you, I'm sure you have -- 

        19          have you determined the unit costs of 

        20          collection by different type of case --

        21              DR. ZINGALE:  Not the --

        22              GOVERNOR BUSH:  This would be a higher --

        23              DR. ZINGALE:  Not --

        24              GOVERNOR BUSH:  -- cost I assume.

        25              DR. ZINGALE:  This today is a higher cost.  

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              89
                                 November 29, 2000
         1          It's a dramatic higher cost.  The costs will go 

         2          down substantially in the administering of 

         3          that.  You don't have to worry about the audit, 

         4          you don't have to worry about the complaints, 

         5          it's a full pass-through.  Dad pays -- 

         6              GOVERNOR BUSH:  Well, given the --

         7              DR. ZINGALE:  -- to the child --

         8              GOVERNOR BUSH:  -- given the collection 

         9          rate of these, which I assume would be lower, 

        10          and the costs -- unit costs of collection, 

        11          which would be higher, why are you saying 

        12          necessarily that this would be a revenue --

        13              DR. ZINGALE:  Well, it's a revenue --

        14              GOVERNOR BUSH:  -- cost for the State.

        15              DR. ZINGALE:  -- loss because today when -- 

        16          when she is on temporary assistance payment, or 

        17          he is on temporary assistance payment, none of 

        18          that money goes to the child.

        19              GOVERNOR BUSH:  I understand. 

        20              DR. ZINGALE:  Okay?  We're going --  

        21              GOVERNOR BUSH:  I'm just saying from the --

        22              DR. ZINGALE:  -- to have to make that 

        23          burden up.

        24              GOVERNOR BUSH:  But if the collection of 

        25          these are -- you know, if these are chronic 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              90
                                 November 29, 2000
         1          no-payers --

         2              DR. ZINGALE:  Uh-hum.  

         3              GOVERNOR BUSH:  -- and you're pursuing them 

         4          and the cost of pursuit, fulfill your 

         5          obligations by Federal law or State law are 

         6          such by -- by changing that, wouldn't you -- 

         7          wouldn't you also see some savings? 

         8              DR. ZINGALE:  I think we would see some 

         9          savings.  We would definitely see some 

        10          substantial savings on the administrative side 

        11          of the program. 

        12              And -- and on an -- on an ethical basis, we 

        13          do have a large proportion of these 

        14          noncustodial parents paying child support.  

        15          They're just not paying it in the legal way.  

        16          They're not --

        17              COMMISSIONER GALLAGHER:  Right.

        18              DR. ZINGALE:  -- giving it to the 

        19          Department of Revenue so we can retain it.  

        20          They're paying it directly to the family in 

        21          violation of Federal law. 

        22              So we would think compliance would go up 

        23          dramatically if that link was established 

        24          directly to the child.

        25              COMMISSIONER GALLAGHER:  Right.  I mean,  

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              91
                                 November 29, 2000
         1          there's still -- it's -- it's a real 

         2          disincentive --

         3              GOVERNOR BUSH:  Yeah.

         4              COMMISSIONER GALLAGHER:  -- if you want to 

         5          take care of your child, to know that when you 

         6          write that check, it's gone to the government. 

         7              DR. ZINGALE:  And when it was an 18-year 

         8          obligation, when it was a large number instead 

         9          of a 2-year obligation, a much smaller number, 

        10          we don't -- we don't hold much hope for this 

        11          being an issue that will fly through the 

        12          Legislature this session. 

        13              But we do believe it's something that we 

        14          have to get up there, we have to get the 

        15          concept out there, we have to work with the -- 

        16          with the Children and Family lobbyists, and -- 

        17          and work in Washington. 

        18              But it is a -- it is an interesting; what 

        19          we think, a very efficient; and ethical way of 

        20          going about doing this.

        21              In -- in the tax side, we have 14 concepts.  

        22          I'm going to talk about four of them. 

        23              The Florida corporate income tax has been 

        24          made efficiently administered, because we 

        25          piggybacked substantially the Federal changes 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              92
                                 November 29, 2000
         1          in the -- in the Federal corporate income tax 

         2          law. 

         3              It requires us every year to pass a -- a 

         4          piece of legislation that incorporates those 

         5          Federal changes. 

         6              We believe that with changes that have 

         7          happened in other states, and a different way 

         8          of putting this forth, we're proposing a change 

         9          in the way we're doing the piggyback this year 

        10          to have it --

        11              (Attorney General Butterworth exited the 

        12          room.) 

        13              DR. ZINGALE:  -- passed prospectively 

        14          forever so that we wouldn't have to pass 

        15          a piece of legislation every year. 

        16              That Legislation going through typically 

        17          attracts, since it's a must-pass bill, a lot of 

        18          other legislation along with it.  And we are 

        19          very hopeful that by passing this, that won't 

        20          happen in the future. 

        21              The second one we want to talk about is -- 

        22          is a fairly quick one.  We are proposing 

        23          extending our privatized contract auditing 

        24          program with FICPA out four years.  And we have 

        25          been in a two-year cycle. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              93
                                 November 29, 2000
         1              It's hard to attract private sector 

         2          companies that think they're going to invest 

         3          in -- in training and -- for a two-year period. 

         4              It's been a very successful partnership, 

         5          and we want to extend that out and give them 

         6          some assurances it's a long-term program.

         7              The third one deals with the State's 

         8          Rewards program.  There is an existing 

         9          Rewards program where if citizens find tax 

        10          fraud or some kind of tax abuse out there, they 

        11          could come in -- they could come in, disclose 

        12          that situation to the Department of Revenue, 

        13          and receive up to 10 percent of the -- of the 

        14          finding.

        15              There are instances where you could use 

        16          other statutes than the State's award 

        17          program -- Reward program that could 

        18          substantially inflate that 10 percent beyond 

        19          that amount; and in a lot of instances, take 

        20          away from citizens some of the things that are 

        21          built into the taxpayer bill of rights. 

        22              We're proposing that for tax purposes that 

        23          the Reward program be the primary and only one 

        24          that can be used to identify those situations.

        25              The fourth is one that is kind of limping 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              94
                                 November 29, 2000
         1          out of the Department of Revenue.

         2              I had asked this summer that we do a very 

         3          comprehensive look across the country in terms 

         4          of different ways of handling dispute 

         5          resolution; ways of compromising and levying 

         6          tax penalty and interest; and ways of going 

         7          about making that a fairer, more expeditious  

         8          process internally in the Department of 

         9          Revenue.

        10              Got a really nice study.  Got a very 

        11          minimal plan in terms of how to reform dispute 

        12          resolution.  We expect it to change 

        13          substantially over the next year.

        14              But in front of this year's Legislature, we 

        15          want to introduce the concept, we want to be 

        16          able to show them the results of the study, we 

        17          want to talk narrowly about penalty and 

        18          narrowly about how one might assure consistency 

        19          and fairness and ease of administration by 

        20          playing around with -- not levying penalties 

        21          for instances where a taxpayer makes a one-time 

        22          or occasional error. 

        23              Very limited scope.  I had hoped it would 

        24          be much broader than that.  We do expect to 

        25          have that come out in the future.

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              95
                                 November 29, 2000
         1              The last deals with property tax.  There 

         2          are two of them that deal with education 

         3          funding.  We're going to ask those to be 

         4          deferred to the next Cabinet meeting. 

         5              Commissioner Gallagher has come up with 

         6          some excellent suggestions.  We have talked to 

         7          him, but have not had time to sit down and work 

         8          them out. 

         9              One may not even require legislation, so 

        10          we're going to work with you to make those 

        11          happen between now and the next Cabinet 

        12          meeting.

        13              Two of them deal with recommendations of 

        14          the Auditor General.  They're already in place.  

        15          The Auditor General has suggested we might want 

        16          to put them in law, and we've agreed to bring 

        17          those forward.  They're fairly minor. 

        18              One deals with our task force.  We've had a 

        19          very successful task force, we get good 

        20          membership, ideas are bubbling up, we're having 

        21          discussions.

        22              For us to continue that in the future, we 

        23          would need a legislative change to extend that 

        24          out.  And so we're proposing extending our task 

        25          force out by a law change.

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              96
                                 November 29, 2000
         1              And finally -- and this will be a 

         2          complicated one, but I hope I can explain it 

         3          fairly briefly.

         4              When Save Our Homes passed, it took all 

         5          homesteaded property and put it under a 

         6          different formula for tax purposes.

         7              Instead of just value being the basis by 

         8          which you levy tax, a formula was put in place, 

         9          3 percent or CPI, whichever was less so long as 

        10          it was not over assessed value.  That 

        11          complicated formula has been debated all over 

        12          the place. 

        13              But for our purposes, if a property 

        14          appraiser does that formula calculation 

        15          correctly, then for tax purposes, that 

        16          homesteaded property is at 100 percent of 

        17          value.

        18              We want to consider in terms of our 

        19          oversight responsibility to look at homesteaded 

        20          property, determine if a property appraiser has 

        21          done the calculation correctly, and then allow 

        22          for roll approval processes, that be considered 

        23          at 100 percent. 

        24              It will dramatically improve our sample 

        25          size, it will dramatically improve the accuracy 

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              97
                                 November 29, 2000
         1          of some of the observations we have in our 

         2          sample.

         3              Those are our legislative concepts. 

         4              If you have any questions, we'd be glad to 

         5          respond.

         6              GOVERNOR BUSH:  Any questions? 

         7              COMMISSIONER GALLAGHER:  Let's move it.

         8              GOVERNOR BUSH:  Is there a second? 

         9              COMPTROLLER MILLIGAN:  Second.

        10              GOVERNOR BUSH:  Moved and seconded.

        11              Without objection, it's approved.

        12              Thank you --

        13              DR. ZINGALE:  Thank you.

        14              GOVERNOR BUSH:  -- Jim. 

        15              (The Department of Revenue Agenda was 

        16          concluded.)

        17                              *   *   *









                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              GOVERNOR BUSH:  The Florida Land and Water 

         2          Adjudicatory Commission.

         3              COMMISSIONER GALLAGHER:  Motion on the 

         4          minutes.

         5              GOVERNOR BUSH:  The first time I got that 

         6          right.

         7              COMPTROLLER MILLIGAN:  That's good.  That's 

         8          a tough one.

         9              COMMISSIONER GALLAGHER:  Motion on minutes.

        10              COMPTROLLER MILLIGAN:  Second.

        11              GOVERNOR BUSH:  Moved and seconded.

        12              Without objection, it's approved.

        13              Item 2.

        14              MS. TINKER:  Item 2, recommendation to 

        15          enter the amended draft final order approving 

        16          an amendment to the Quadrangle Development of 

        17          Regional Impact in Orange County.

        18              That amendment would allow for 

        19          135 additional multifamily units, an increase 

        20          of 8,000 square feet of retail, in exchange for 

        21          a reduction of 90,000 square feet of office 

        22          space with development conditions.

        23              There are representatives here today from 

        24          both Orange County and Quadrangle Development 

        25          Company to answer any questions, but they do 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          not have prepared remarks.

         2              COMMISSIONER GALLAGHER:  Motion to approve.

         3              COMPTROLLER MILLIGAN:  I'll second it.

         4              GOVERNOR BUSH:  Moved and seconded.

         5              Any discussion? 

         6              Without objection, it's approved.

         7              Thanks, T2.

         8              MS. TINKER:  Thanks. 

         9              (The Florida Land and Water Adjudicatory 

        10          Commission Agenda was concluded.)

        11                              *   *   *















                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              MR. STRUHS:  Good morning.

         2              GOVERNOR BUSH:  Good morning, David.

         3              COMMISSIONER GALLAGHER:  Motion on the 

         4          minutes, Board of Trustees.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              MR. STRUHS:  The second item is an 

         8          interesting one.  It's an IFAS property in 

         9          Washington County that they're looking to 

        10          surplus. 

        11              And you will know, of course, that State 

        12          law requires that they first offer it to the 

        13          local government; and in this case, 

        14          Washington County did want to purchase it, and 

        15          is purchasing it for the -- the appraised 

        16          value -- full value.

        17              The Mayor of the City of Chipley, 

        18          Mr. Tommy McDonnell is here.  He doesn't need 

        19          to speak unless you have questions of him.

        20              GOVERNOR BUSH:  Mayor, how are you doing? 

        21              MR. McDONNELL:  Fine, sir. 

        22              How are you doing?

        23              GOVERNOR BUSH:  Excellent.

        24              COMMISSIONER GALLAGHER:  Motion on Item 2.

        25              GOVERNOR BUSH:  Glad you're here.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              You don't want to speak?  Normally mayors 

         2          get up and say something.  Come on.

         3              MR. McDONNELL:  I'll be glad to.

         4              SECRETARY HARRIS:  Mr. Economic 

         5          Development.

         6              GOVERNOR BUSH:  You just did.

         7              COMMISSIONER GALLAGHER:  Motion on Item 2.

         8              GOVERNOR BUSH:  Is there a second?

         9              COMPTROLLER MILLIGAN:  Second.

        10              SECRETARY HARRIS:  Second.

        11              GOVERNOR BUSH:  Moved and seconded.

        12              Without objection, it's approved.

        13              MR. STRUHS:  Item 3, we're --

        14              GOVERNOR BUSH:  How's Chipley doing, Mayor?

        15              MR. McDONNELL:  Doing real well, sir.

        16              GOVERNOR BUSH:  All right.  

        17              MR. McDONNELL:  We -- we're doing well.

        18              If I could make just one comment.

        19              GOVERNOR BUSH:  Well, now it's already 

        20          approved.  You -- now it's already approved.  

        21          You're safe.  Go ahead. 

        22              MR. McDONNELL:  I --

        23              GOVERNOR BUSH:  Smart guy.

        24              MR. McDONNELL:  A real quick comment about 

        25          what I think an outstanding job our Secretary 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          of State is doing.  And -- and I -- it's a 

         2          privilege and an honor to have her serving the 

         3          State of Florida.

         4              And I just --

         5              SECRETARY HARRIS:  Thank you.

         6              Mayor, I just want you to know that, thanks 

         7          to you -- and I don't remember which magazine 

         8          it was -- but I have a big picture holding --

         9              MR. McDONNELL:  I saw --

        10              SECRETARY HARRIS:  -- a possum up --

        11              MR. McDONNELL:  -- People.

        12              SECRETARY HARRIS:  -- front.  So now your 

        13          Possum Festival --

        14              MR. McDONNELL:  People magazine.  Yeah. 

        15              SECRETARY HARRIS:  That was great.

        16              MR. McDONNELL:  That was great.

        17              Thank y'all for --

        18              GOVERNOR BUSH:  There's culture in Florida.

        19              COMMISSIONER GALLAGHER:  Yeah, 

        20          Possum Festival.

        21              GOVERNOR BUSH:  That's Wausau, that's not 

        22          Chipley.

        23              SECRETARY HARRIS:  Yeah.  But he --

        24              COMPTROLLER MILLIGAN:  That's right.

        25              COMMISSIONER GALLAGHER:  Washington County.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              GOVERNOR BUSH:  I know.

         2              SECRETARY HARRIS:  We found him.

         3              GOVERNOR BUSH:  I know.

         4              COMMISSIONER GALLAGHER:  Boy, I tell you -- 

         5          you see that sign of Wausau, and if you go past 

         6          it, you have passed Wausau.

         7              GOVERNOR BUSH:  I'm going to challenge the 

         8          Cabinet to do the 5K Possum Trot next time.

         9              SECRETARY HARRIS:  I think we all should go 

        10          to the Possum Festival.  It was wonderful.

        11              MR. McDONNELL:  Love to have you.

        12              Thank you.

        13              GOVERNOR BUSH:  Senator --

        14              COMMISSIONER GALLAGHER:  I just want to --

        15              GOVERNOR BUSH:  -- Nelson and --

        16              COMMISSIONER GALLAGHER:  -- see you eat 

        17          some possum.

        18              GOVERNOR BUSH:  -- Commissioner Gallagher 

        19          probably did go this year.

        20              COMMISSIONER GALLAGHER:  I didn't go this 

        21          year.

        22              GOVERNOR BUSH:  Did you -- did you go?

        23              TREASURER NELSON:  Grace Nelson went.

        24              SECRETARY HARRIS:  Did -- did she buy a 

        25          possum? 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              Did she buy a possum and hold it up? 

         2              COMMISSIONER GALLAGHER:  Did she buy one?

         3              TREASURER NELSON:  Hey, Mayor, before you 

         4          leave.  Just to say that I've had the privilege 

         5          of being at the Possum Festival many times.  I 

         6          have bid on the possums.

         7              MR. McDONNELL:  Yes, you have, sir.

         8              TREASURER NELSON:  Fortunately -- 

         9          fortunately, what you do, you're very wise. 

        10              You auction off a possum, and then you put 

        11          the possum right back in the cage, and you 

        12          auction him off again.

        13              GOVERNOR BUSH:  I -- I think --

        14              SECRETARY HARRIS:  You didn't -- you 

        15          didn't -- 

        16              MR. McDONNELL:  I think everybody sitting 

        17          in that table has bought that same possum --

        18              GOVERNOR BUSH:  Exactly.

        19              MR. McDONNELL:  -- over and over again.

        20              COMMISSIONER GALLAGHER:  I tell you what, I 

        21          think the one I bought finally died because -- 

        22              SECRETARY HARRIS:  You didn't have to pay 

        23          him --

        24              COMMISSIONER GALLAGHER:  Just by being held 

        25          up by the tail all that time.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              SECRETARY HARRIS:  You didn't have to pay 

         2          him to take it back? 

         3              COMMISSIONER GALLAGHER:  Is that what the 

         4          deal is, double? 

         5              TREASURER NELSON:  Oh, yeah.  You get it -- 

         6          you get it both ways:  You buy it, and then you 

         7          have to buy it for them to take it back so they 

         8          can turn around and reauction it.

         9              SECRETARY HARRIS:  One -- one Governor 

        10          brought it back to the mansion, and he was the 

        11          pet at the mansion for a while.

        12              COMMISSIONER GALLAGHER:  The --

        13              GOVERNOR BUSH:  That's not going to happen.

        14              COMMISSIONER GALLAGHER:  -- that really 

        15          hurt the rest of the auction.

        16              MR. McDONNELL:  Took us -- took us 

        17          three months to catch another possum.  But -- 

        18              COMMISSIONER GALLAGHER:  Well then, what in 

        19          the world was that stuff you were serving that 

        20          they call possum? 

        21              GOVERNOR BUSH:  That's possum ice cream.

        22              MR. McDONNELL:  I'll talk to you about that 

        23          privately.

        24              TREASURER NELSON:  Mayor, you know my -- my 

        25          family goes back five generations in 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          Washington County, before Washington County was 

         2          Washington County.  It was then known as 

         3          Orange Hill, and still is, by the way.

         4              (Attorney General Butterworth entered the 

         5          room.)

         6              TREASURER NELSON:  Back then, I don't think 

         7          they had possum auctions.

         8              MR. McDONNELL:  Well, there won't be any 

         9          possums, because your family was eating most of 

        10          those possums.

        11              TREASURER NELSON:  I think you speak truth.

        12              MR. McDONNELL:  Congratulations.

        13              GOVERNOR BUSH:  Where in the heck is MSNBC 

        14          when we need them, you know? 

        15              TREASURER NELSON:  That's right.

        16              GOVERNOR BUSH:  Maybe they're here.

        17              Any chance that's going to be live?  We -- 

        18          I hope this is on --

        19              COMMISSIONER GALLAGHER:  Hardball.  

        20          Hardball. 

        21              All right.

        22              GOVERNOR BUSH:  Bring Chris Matthews to the 

        23          Possum Festival next -- next time.

        24              David.

        25              SECRETARY HARRIS:  Tough group.  Tough 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          group.

         2              MR. STRUHS:  Item 3 is authorization to 

         3          acquire a 100 percent interest in 40 acres in 

         4          the Indian River Lagoon Blueway.

         5              COMMISSIONER GALLAGHER:  Motion.

         6              ATTORNEY GENERAL BUTTERWORTH:  Second.

         7              GOVERNOR BUSH:  Moved and seconded.

         8              Without objection, it's approved.

         9              MR. STRUHS:  Item 4 is a -- is a real 

        10          special one.  As you know, we've been trying to 

        11          put more of our attention in acquiring 

        12          conservation easements, rather than using 

        13          public resources to take fee simple title. 

        14              And this is an excellent example of having 

        15          accomplished that.  It's a conservation 

        16          easement for some property, about 681 acres on 

        17          the Apalachicola River, which has been held 

        18          in -- in remarkably could stewardship by the 

        19          Hatcher family. 

        20              And I'd like to, if I could, just for a 

        21          moment, introduce Mr. Jimmy Hatcher, who's 

        22          sitting here in the front row.  And he's 

        23          been -- he -- he and his family have been 

        24          excellent stewards of this property.

        25              GOVERNOR BUSH:  Welcome.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              MR. STRUHS:  And the item you have before 

         2          you now, we're seeking approval to acquire a 

         3          conservation easement on this property.  It 

         4          acquires the interests that the State holds 

         5          important for approximately 62 percent of what 

         6          the fee simple value of the land actually is.

         7              So we're seeking your approval for this 

         8          item, please.

         9              ATTORNEY GENERAL BUTTERWORTH:  Make a 

        10          motion?

        11              GOVERNOR BUSH:  Yes, please.

        12              ATTORNEY GENERAL BUTTERWORTH:  Motion.

        13              SECRETARY HARRIS:  Second.

        14              GOVERNOR BUSH:  Moved and seconded.

        15              ATTORNEY GENERAL BUTTERWORTH:  I have one 

        16          question, Governor, if I could.  Just --

        17              GOVERNOR BUSH:  Yeah, please.

        18              ATTORNEY GENERAL BUTTERWORTH:  -- just to 

        19          make the -- just to have the record clear on 

        20          this.

        21              I agree with you, sir, that 

        22          Mr. and Mrs. Hatcher have done a wonderful job 

        23          on this piece of property.  It's -- it's -- and 

        24          I totally agree with the -- with the 

        25          conservation easement. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              But just to -- just to set the record 

         2          straight, I'm a little concerned about the 

         3          reserving of the -- of the water rights.  I 

         4          want to make sure that whatever happens here, 

         5          the withdrawal of the water will not cause 

         6          detriment to the -- to the actual value of our 

         7          conservation easements.

         8              So could we put something in the record 

         9          to -- to clarify that? 

        10              MR. STRUHS:  Yes, sir.

        11              In fact, I wanted to compliment your staff 

        12          in particular for working with us as late as 

        13          this morning, and -- and also to Mr. Hatcher 

        14          for coming up with what we believe is -- is 

        15          better language to better define what the 

        16          State's rights are; what the Board of Trustees 

        17          rights are; and obviously what Mr. Hatcher's 

        18          rights are. 

        19              And I would then propose to read into the 

        20          record the new language that would make up 

        21          paragraph 4 of Section 3. 

        22              Item Number 4, water withdrawal.  Grantor 

        23          retains the right to apply for a consumptive 

        24          use permit on the protected property, including 

        25          an application to install well fields on the 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          protected property so long as such water 

         2          withdrawal is not detrimental to the 

         3          conservation values of the protected property.

         4              That would be the new substitute language.

         5              And thanks, in particular, to 

         6          Diana Sawaya-Crane for working with us and 

         7          Mr. Hatcher on this plan.

         8              ATTORNEY GENERAL BUTTERWORTH:  Mr. Hatcher 

         9          also agrees.

        10              GOVERNOR BUSH:  Thank you, sir.

        11              ATTORNEY GENERAL BUTTERWORTH:  I move it as 

        12          amended then, Governor.

        13              COMMISSIONER GALLAGHER:  Second.

        14              GOVERNOR BUSH:  There's a motion and a 

        15          second, as amended.

        16              It's approved.

        17              MR. STRUHS:  Item --

        18              GOVERNOR BUSH:  Thank you for coming, sir.

        19              MR. STRUHS:  Item Number 5 is an option 

        20          agreement to acquire 54.93 acres for the 

        21          benefit of the Florida Board of Regents and the 

        22          University of West Florida.

        23              Mr. Tom Henderson is here from the 

        24          University of West Florida in the event you 

        25          have questions.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Motion.

         2              ATTORNEY GENERAL BUTTERWORTH:  Second.

         3              GOVERNOR BUSH:  Moved and seconded.

         4              Without objection, it's approved.

         5              MR. STRUHS:  Item Number 6, we continue to 

         6          make good progress on the number one ranked 

         7          item on our CARL list, which is the 

         8          Lake Wales Ridge Ecosystem Project. 

         9              This is an instance in which we had been 

        10          trying to acquire this land for some time, and 

        11          were not being particularly successful.  And 

        12          then Polk County stepped in, and Polk County 

        13          got involved, and -- and was very successful, 

        14          and was able to bring this option agreement to 

        15          a closure so we can present it to you for 

        16          your --

        17              GOVERNOR BUSH:  Just out of curiosity, why 

        18          would Polk County be able to do that, and the 

        19          Department of Environmental Protection not? 

        20              MR. STRUHS:  Well, actually, it wasn't the 

        21          DEP, it was the Nature Conservancy was working 

        22          on this.  And, you know, sometimes it just 

        23          requires a -- a cooling off period and a change 

        24          of face.  And I think that's what was 

        25          accomplished here.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              GOVERNOR BUSH:  Good.

         2              Is there a motion? 

         3              ATTORNEY GENERAL BUTTERWORTH:  Motion.

         4              SECRETARY HARRIS:  Second.

         5              COMMISSIONER GALLAGHER:  Second.

         6              GOVERNOR BUSH:  Moved and seconded.

         7              Without objection, it's approved.

         8              MR. STRUHS:  Item 7 is an option agreement 

         9          for 34.7 acres within the Cayo Costa Island 

        10          CARL Project from the Trust for Public Lands. 

        11              This is an instance in which we are sharing 

        12          the cost 50/50 with the Federal government.  

        13          And we're happy to introduce Susan Trokey and 

        14          Roger Beckham, both from the United States Fish 

        15          and Wildlife Service, who are here. 

        16              If you want to identify yourselves in the 

        17          back. 

        18              GOVERNOR BUSH:  Welcome.

        19              MR. STRUHS:  And they're -- they're 

        20          available in the event you have any questions.  

        21          They will own half the property being acquired; 

        22          the Board of Trustees, the other half. 

        23              And we're also fortunate that the Fish and 

        24          Wildlife Service will provide the management 

        25          oversight for that island property.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Motion on 7.

         2              ATTORNEY GENERAL BUTTERWORTH:  Second.

         3              GOVERNOR BUSH:  Moved and seconded.

         4              Without objection, it's approved.

         5              MR. STRUHS:  Item 8 is being withdrawn.

         6              COMMISSIONER GALLAGHER:  Motion to 

         7          withdraw.

         8              COMPTROLLER MILLIGAN:  Second.

         9              GOVERNOR BUSH:  Motion to withdraw, and a 

        10          second.

        11              It's approved.

        12              MR. STRUHS:  Item 9, it's a fairly lengthy 

        13          description.  So in the interest of time, 

        14          unless you want me to read it, we're simply 

        15          seeking approval for the item. 

        16              It's an expansion of a -- a cruise ship 

        17          terminal by the Jacksonville Port Authority.  

        18          And it is near something that's known as the 

        19          Dames Point area.

        20              COMMISSIONER GALLAGHER:  Motion with 

        21          approval, subject to the special approved 

        22          conditions.

        23              MR. STRUHS:  Thank you.

        24              ATTORNEY GENERAL BUTTERWORTH:  Second.

        25              GOVERNOR BUSH:  Is there a second? 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              ATTORNEY GENERAL BUTTERWORTH:  Second.

         2              SECRETARY HARRIS:  Governor, wish to 

         3          abstain, due to a possible perceived conflict 

         4          of interest.

         5              GOVERNOR BUSH:  Okay. 

         6              There's a motion and a second.

         7              The approval is subject to special approval 

         8          conditions.

         9              With one abstention, it's approved.

        10              COMMISSIONER GALLAGHER:  Item 10.

        11              GOVERNOR BUSH:  We did it.

        12              MR. STRUHS:  We're ready for Item 10 now? 

        13              GOVERNOR BUSH:  Yes, we are.

        14              SECRETARY HARRIS:  I thought you just --

        15              MR. STRUHS:  Okay. 

        16              SECRETARY HARRIS:  -- did it.

        17              MR. STRUHS:  I'm sorry.

        18              GOVERNOR BUSH:  I just did it, I think.  

        19          I'm --

        20              SECRETARY HARRIS:  Yeah.  That's what --

        21              GOVERNOR BUSH:  Unless I've --

        22              SECRETARY HARRIS:  -- I just abstained 

        23          from.

        24              GOVERNOR BUSH:  -- lost my mind.

        25              MR. STRUHS:  Item 10 is complete then.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              COMMISSIONER GALLAGHER:  Nine is complete.  

         2          We're on --

         3              GOVERNOR BUSH:  Nine is complete.

         4              MR. STRUHS:  -- 10 now.

         5              COMMISSIONER GALLAGHER:  Yes.

         6              GOVERNOR BUSH:  Yes, we are, David.

         7              SECRETARY HARRIS:  And my -- 

         8              COMMISSIONER GALLAGHER:  Welcome to the 

         9          Cabinet meeting of --

        10              SECRETARY HARRIS:  My abstention was 

        11          Item 10.

        12              ATTORNEY GENERAL BUTTERWORTH:  That's 

        13          right.

        14              GOVERNOR BUSH:  Oh, you're abstaining --

        15              SECRETARY HARRIS:  I'm abstaining --  

        16              GOVERNOR BUSH:  -- you're abstaining on 10.

        17              SECRETARY HARRIS:  -- on 10.

        18              GOVERNOR BUSH:  That makes more sense.

        19              COMMISSIONER GALLAGHER:  You're talking 

        20          about 10?

        21              GOVERNOR BUSH:  That makes more sense.

        22              I was wondering what you were abstaining 

        23          on 9 --

        24              MR. STRUHS:  I think -- I think the reason  

        25          that I'm confused is Secretary Harris --

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              GOVERNOR BUSH:  You got -- I got -- you're 

         2          right. 

         3              MR. STRUHS:  I --

         4              COMMISSIONER GALLAGHER:  Okay.

         5              GOVERNOR BUSH:  So --

         6              COMMISSIONER GALLAGHER:  So it's unanimous 

         7          on 9.

         8              GOVERNOR BUSH:  It's unanimous on 9.

         9              SECRETARY HARRIS:  On 9.

        10              And 10 --

        11              GOVERNOR BUSH:  Could we get to Item 10 

        12          now? 

        13              MR. STRUHS:  Yes.

        14              GOVERNOR BUSH:  Thank you.

        15              COMMISSIONER GALLAGHER:  Hallelujah. 

        16              GOVERNOR BUSH:  My bad -- I --

        17              MR. STRUHS:  All right.

        18              COMMISSIONER GALLAGHER:  It's deferred -- 

        19              GOVERNOR BUSH:  I'll take responsibility --

        20              COMMISSIONER GALLAGHER:  -- from July 25th, 

        21          September 12th, September 26th, and 

        22          October 24th.

        23              MR. STRUHS:  Right. 

        24              And you will recall that this item is -- is 

        25          what gave rise to what is a -- a renewed 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1          interest in making sure that counties make 

         2          significant --

         3              GOVERNOR BUSH:  Yes.

         4              MR. STRUHS:  -- progress on their 

         5          Manatee Protection Plans. 

         6              I'm happy to report that in this instance, 

         7          some months later, we are now seeing that 

         8          significant progress being made.  And we've 

         9          consulted with the Florida Fish and Wildlife 

        10          Conservation Commission, who have worked with 

        11          Sarasota County. 

        12              The county, in turn, is now working with 

        13          Mote Marine Laboratory, and together are 

        14          working on making significant progress on their 

        15          Manatee Protection Plan. 

        16              It's worth noting that the county already 

        17          has in place speed zones, including a no wake 

        18          zone in this area.  And the signs have -- have 

        19          been posted. 

        20              So with that as background, we would 

        21          recommend approval of it, subject to the 

        22          special approval conditions and payment of 

        23          $30,716.57.

        24              COMMISSIONER GALLAGHER:  Motion on 10.

        25              GOVERNOR BUSH:  Is there a second?  

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              ATTORNEY GENERAL BUTTERWORTH:  Second.

         2              SECRETARY HARRIS:  I'm abstaining.

         3              GOVERNOR BUSH:  The motion is -- is passed, 

         4          with one abstention.

         5              COMMISSIONER GALLAGHER:  I'd like to move 

         6          deferral of Item 11 --

         7              GOVERNOR BUSH:  Is anybody from --

         8              COMMISSIONER GALLAGHER:  -- to 

         9          February 6 -- 

        10              GOVERNOR BUSH:  -- Sarasota here?

        11              COMMISSIONER GALLAGHER:  -- meeting.

        12              GOVERNOR BUSH:  Thank you all very much for 

        13          your cooperation, by the way.

        14              MR. STUCKEY:  Well, thank you very much.  

        15          Appreciate your good work. 

        16              GOVERNOR BUSH:  Excellent.

        17              MR. STUCKEY:  We'll --

        18              GOVERNOR BUSH:  Enjoy your sailing.

        19              COMMISSIONER GALLAGHER:  Motion to take 11 

        20          to February 6 meeting, 2001.

        21              MR. STRUHS:  Thank you.

        22              GOVERNOR BUSH:  There's a motion to defer.

        23              Is there a second? 

        24              ATTORNEY GENERAL BUTTERWORTH:  Second.

        25              GOVERNOR BUSH:  Moved and seconded.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1              Without objection, it's deferred till 

         2          February 6th, 2001.

         3              (The Board of Trustees of the Internal 

         4          Improvement Trust Fund Agenda was concluded.)

         5                              *   *   *

         6              (The Cabinet meeting was concluded at 

         7          11:08 a.m.)



















                        ACCURATE STENOTYPE REPORTERS, INC.

                                 November 29, 2000
         1                    CERTIFICATE OF REPORTER




         5     STATE OF FLORIDA:

         6     COUNTY OF LEON:

         7              I, LAURIE L. GILBERT, do hereby certify that 

         8     the foregoing proceedings were taken before me at the 

         9     time and place therein designated; that my shorthand 

        10     notes were thereafter translated; and the foregoing 

        11     pages numbered 1 through 119 are a true and correct 

        12     record of the aforesaid proceedings.

        13              I FURTHER CERTIFY that I am not a relative, 

        14     employee, attorney or counsel of any of the parties, 

        15     nor relative or employee of such attorney or counsel, 

        16     or financially interested in the foregoing action.

        17              DATED THIS 13TH day of DECEMBER, 2000. 


        23                   LAURIE L. GILBERT, RPR, CCR, CRR, RMR
                             100 Salem Court
        24                   Tallahassee, Florida 32301

                        ACCURATE STENOTYPE REPORTERS, INC.