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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
Representing:
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
DEPARTMENT OF VETERANS' AFFAIRS
DEPARTMENT OF REVENUE
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
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
850/878-2221
2
November 29, 2000
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
BILL NELSON
Treasurer
TOM GALLAGHER
Commissioner of Education
* * *
ACCURATE STENOTYPE REPORTERS, INC.
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November 29, 2000
I N D E X
ITEM ACTION PAGE
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
1 Approved 5
2 Approved 5
3 Approved 6
4 Approved 13
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 16
2 Approved 16
3 For Information Only 18
DEPARTMENT OF VETERANS' AFFAIRS:
(Presented by Robin Higgins,
Executive Director)
1 Approved 66
2 Approved 66
3 For Information Only 66
DEPARTMENT OF REVENUE:
(Presented by James A. Zingale, Ph.D.,
Executive Director)
1 Approved 79
2 Approved 79
3 Approved 80
4 Approved 80
5 Approved 97
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November 29, 2000
I N D E X
(Continued)
ITEM ACTION PAGE
FLORIDA LAND AND WATER
ADJUDICATORY COMMISSION:
(Presented by Teresa Tinker,
Secretary)
1 Approved 98
2 Approved 99
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented by David B. Struhs,
Secretary)
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Substitute 8 Withdrawn 113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
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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.
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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
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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.
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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,
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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
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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,
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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.)
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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
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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 --
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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.
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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.
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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
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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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November 29, 2000
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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November 29, 2000
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
ACCURATE STENOTYPE REPORTERS, INC.
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November 29, 2000
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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November 29, 2000
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
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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
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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 * * *
18
19
20
21
22
23
24
25
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DEPARTMENT OF VETERANS' AFFAIRS 66
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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
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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
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DEPARTMENT OF VETERANS' AFFAIRS 68
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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
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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
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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
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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
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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
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DEPARTMENT OF VETERANS' AFFAIRS 73
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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
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DEPARTMENT OF VETERANS' AFFAIRS 74
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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
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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
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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
ACCURATE STENOTYPE REPORTERS, INC.
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 * * *
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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 * * *
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION 98
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.
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION 99
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 * * *
12
13
14
15
16
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 100
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.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 101
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.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 102
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.
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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?
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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.
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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
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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
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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.
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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.
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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
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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.
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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.
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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.
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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?
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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.
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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 --
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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
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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?
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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.
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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.)
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120
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1 CERTIFICATE OF REPORTER
2
3
4
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.
18
19
20
21
22
23 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
24 Tallahassee, Florida 32301
850/878-2221
25
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