1
1
2
3
4
T H E C A B I N E T
5 S T A T E O F F L O R I D A
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6
Representing:
7 STATE BOARD OF ADMINISTRATION
DEPARTMENT OF REVENUE
8 HIGHWAY SAFETY AND MOTOR VEHICLES
TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND
9 STATE BOARD OF EDUCATION
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10
The above agencies came to be heard before THE
11 FLORIDA CABINET, Honorable Governor Bush presiding, in the City
of Fort Lauderdale City Hall, 100 North Andrews Avenue, Fort
12 Lauderdale, Florida, on Tuesday October 12, 1999, commencing at
approximately 9:00 a.m.
13
14
Reported by:
15 DAWN M. WHITMARSH
Registered Professional Reporter
16 Certified Court Reporter
Notary Public in and for
17 the State of Florida at large
18
19
20
21
22
23
24
25
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1 APPEARANCES:
Representing the Florida Cabinet:
2
JEB BUSH
3 Governor
4 BOB CRAWFORD
Commissioner of Agriculture
5
KATHERINE HARRIS
6 Secretary of State
7 BOB BUTTERWORTH
Attorney General
8
BILL NELSON
9 Treasurer
10 TOM GALLAGHER
Commissioner of Education
11
* * *
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 INDEX
ITEM ACTION PAGE
2
STATE BOARD OF ADMINISTRATION:
3 (Presented by Tom Herndon,
Executive Director)
4 1 Approved 29
2 Approved 34
5 2 (1) (b) Approved 35
2 (1) (c) Approved 36
6 2 Approved 37
2 (b) Approved 38
7 2 (c) Approved 39
2 (d) Approved 39
8 3 Approved 40
9 DEPARTMENT OF REVENUE:
(Presented by Jim Zingale)
10 1 Approved 47
2 Approved 54
11 3 Discussion 54-75
12 DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES:
(Presented by Fred O. Dickinson, III,
13 Executive Director)
1 Approved 79
14 2 Approved 81
3 Approved 82
15 BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
16 TRUST FUND:
(Presented by David B. Struhs, Secretary)
17 1 Approved 83
2 Deferred 83
18 3 Approved 83
4 Deferred 84
19 5 Approved 84
6 Approved 100
20
State Board of Education:
21 (Presented by Commissioner Tom Gallagher)
1 Approved 100
22 2 Deferred 100
3 Deferred 101
23 4 Withdrawn 101
24 CERTIFICATE OF REPORTER 102
* * *
25
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1 P-R-O-C-E-E-D-I-N-G-S
2 (agenda items commenced at 10:15 a.m.)
3 GOVERNOR BUSH: The next Cabinet meeting will be held
4 October 26th in Tallahassee.
5 Now, what I would like to do is ask Broward County's
6 own General Butterworth to describe -- and only Rachel's
7 allowed to stay asleep during this lesson -- what the
8 Cabinet system is, because it's unique to all 50 states.
9 We truly have a unique system of government because in
10 three years' time it's going to be changed. So General,
11 could you please give a description of the Cabinet system,
12 what we do?
13 Then I would like to ask each member of the Cabinet to
14 describe briefly what they do in terms of the departments
15 that they manage.
16 GENERAL BUTTERWORTH: Governor, thank you very much.
17 And hopefully, as the Governor stated, only Rachel will
18 stay asleep during this comment.
19 But one of Florida's most outspoken governors was
20 Claude Kirk. Among the many things he was outspoken about
21 was the Florida Cabinet.
22 In describing this body, Governor Kirk once referred
23 to it as the six dwarfs. No one is laughing.
24 COMMISSIONER GALLAGHER: We're not laughing.
25 GENERAL BUTTERWORTH: And it's shared by future
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1 governors. It remains unclear whether Governor Kirk was
2 taking his claim to be Snow White. What was really clear,
3 though, what's the Governor's feeling about sharing
4 certain administrative duties with six other elected
5 officials.
6 And over the years, some have echoed Governor Kirk's
7 complaints, while others have expressed gratitude for
8 assisting governments. That confuses effective decision
9 making, and makes it a discussion for three and a half
10 hours what the system, the Cabinet system is.
11 If Rachel needs a diaper change, please feel free.
12 First it should be pointed out that when the Governor
13 and Cabinet meet, they do so as independent but equal
14 individuals. Most people's idea of a Cabinet is based on
15 a model in which the people elect a chief executive
16 president who in turn appoints his or her Cabinet to
17 oversee primary governmental actions.
18 Under Florida's unique system of shared governments,
19 the people elect not only the Governor, but six other
20 officials to equally oversee various key departments. In
21 our individual capacities, my colleagues and I oversee our
22 own agencies and the departments and the other
23 departments. And you will be hearing about those agencies
24 in a few moments from the other members.
25 In our capacity, we make up the Florida Cabinet, and as
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1 such, share certain responsibilities with the Governor.
2 We meet twice a month. We come together in public
3 meetings like this in order to carry out those joint
4 responsibilities.
5 A few decades ago, about three or four decades ago, the
6 Cabinet oversaw approximately 127 agencies. That was
7 unchanged except by constitution to where it is now a
8 subsequent regulation to where it is now.
9 So the Governor now in Florida has direct authority
10 over the bulk of Florida's agencies. But there are some
11 that do fall under the Governor and Cabinet. And in fact,
12 in those earlier days when the Governor and Cabinet met
13 together, they really micromanaged the whole entire
14 government of the State of Florida.
15 In its handbook on Florida governmental, Ann Morris
16 relates that once in the 1930s the governor and Cabinet
17 spent an hour debating whether to purchase a mule for the
18 farm at the state mental hospital.
19 I do not believe there are any mule purchases on
20 today's agenda. There might be one dangling participle.
21 Over the decades, more decision making has been placed in
22 the hands of the front line administrators answer ableable
23 to us. And therefore, our shared Cabinet responsibilities
24 really has dwindled. Today the Governor and Cabinet sit
25 as the head of the Department of Highway Safety and Motor
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1 Vehicles, the Department of Law Enforcement, Veterans
2 Affairs and Revenue.
3 In addition, we sit as directors over a variety of
4 boards and commissions, including the Board of Education
5 and Administration and also State Land. So therefore, the
6 Governor and Cabinet will be taking on the issues that are
7 probably of utmost importance to the State, that being
8 state law enforcement, the environment, buying, selling,
9 leasing state land. Functioning full faith and credit of
10 our state by bond issues, also education and clemency, in
11 some instances, only certain Cabinet members and the
12 Governor and constitution commission.
13 Twice a week the agency has come before us and we
14 review and take action. For instance, as trustees of the
15 Internal Improvement Trust Fund, we might be asked to
16 authorize the purchase of state land, and that will happen
17 here today, a very historic purchase.
18 As overseers of the Highway Public Safety, we oversee
19 the design of vehicle license plates, but we also discuss
20 the safety on the roadways of the State of Florida.
21 As members of the State Board of Education, we might be
22 asked to approve appointments to community colleges' board
23 of directors, and also we may review, as we'll discuss
24 today, our community colleges, and will they or how should
25 they be able to handle the granting of four-year degrees.
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1 Well, anything that comes before us will have profound
2 policy implications that generate faith and controversy.
3 Most of them do not. Most things, literally, are a 7-0
4 vote on the Cabinet, and historically has been such.
5 That's largely because now we are awake during the
6 meeting and we do listen. But that each Wednesday before
7 a Cabinet meeting, each of our chief Cabinet aides will
8 have a pre-meeting, a public meeting where people who
9 appear before the Cabinet meeting next will discuss the
10 issue.
11 And in those discussions, many times the people will
12 see the light, or sometimes our Cabinet aides will see the
13 light, and they will. And a lot of things do get worked
14 out for the best. And everything, of course, is done
15 publicly. And then the next meeting on the following
16 Tuesday, it does help bring it down to a meeting which is
17 manageable.
18 Some people call the Cabinet aides' meeting the little
19 Cabinet. The Cabinet aides call it something else, the
20 real Cabinet.
21 We're considered to be the rubber stamp. But that
22 groundwork does help in order to, I think, make things go
23 better up here. Three years of governors stated with the
24 last election the people have changed.
25 So what you're seeing here is the last time that this
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1 Cabinet will be seated with seven members -- six members.
2 You know, it's not the Governor and his Cabinet, it's the
3 Governor and the Cabinet.
4 Now, most governors will say that because the governor
5 is not -- you're not part of the Cabinet. It's governor
6 and the Cabinet.
7 I know Governor Askew, who ever he would be told, you
8 know, the Cabinet. And he said, no, no, it's the governor
9 and the Cabinet, the governor is not a member of the
10 Cabinet. And that is absolutely correct.
11 GOVERNOR BUSH: I didn't know that. Learn something
12 every day.
13 GENERAL BUTTERWORTH: Well, Governor Askew said he
14 didn't realize that either, but he said wait a minute.
15 That's the way it goes.
16 What this does do, as the changes are made, and for the
17 fifth time over a 150 years, the powers and duties of the
18 Cabinet changed. Over the years it has given the people a
19 voice once every couple weeks for us.
20 What will end up happening is only a few of us will
21 still be up here. Not I, individually, but so far as the
22 office itself.
23 In fact, only two current Cabinet positions will
24 remain. That will be attorney general and the agriculture
25 commission. The third Cabinet position, the chief
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1 financial officer, will be created by combining the duties
2 of the insurance commissioner and the comptroller.
3 It was placed on the ballot last year and was placed on
4 the ballot at the insistence of both General Milligan, who
5 holds one of those offices now, and Commissioner Nelson,
6 who holds the other.
7 Same time, the education commissioner will become
8 another appointed position. They will not serve on the
9 Cabinet. And the Secretary of State will become the
10 custodian of records not serving on the Cabinet.
11 Therefore, we will have three Cabinet members and the
12 Governor. That equals four, which does then enhance,
13 that's right.
14 GOVERNOR BUSH: How are we going to break the tie?
15 GENERAL BUTTERWORTH: Wherever the Governor votes, if
16 it's a tie vote, that's the way -- that's what it will
17 be.
18 So what has happened here is that the people of the
19 State of Florida have voted that they wish to do more of
20 what other states are doing insofar as getting more
21 authority to the chief executive, but still have more than
22 just one person determine the issues of full faith and
23 credit of the State of Florida, the environment of the
24 state, the law enforcement of the state. So in a way, I
25 think it's going to be a better way of doing it.
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1 I was thinking, Bob, I was thinking I have about a
2 20-by-20-foot piece of property behind my house. I need
3 to start growing radishes and stuff. So I'm thinking I'm
4 qualified. And Bob has his law degree, so he'll run for
5 this one.
6 So it's a distinct honor here to be serving. Presently
7 now as the longest serving member of the Cabinet, this is
8 my thirteenth year. Many people before me have served.
9 How many did Potter serve? And a couple secretaries, only
10 had a few Secretaries of State. How many years did they
11 serve years ago? The Secretaries of State, some of them
12 serve 30 and 40 years?
13 And so the reason for that was there were no term
14 limits on Cabinet members, but there was a term limit on
15 the governor. And at that time it was all equal.
16 In fact, all Cabinet members and the governor had their
17 own plane. Of course, Bob still has 12 of them.
18 So really, we literally had seven governors in the
19 State of Florida bringing these changes back in the late
20 '60s. So that's why Cabinet members would stay on for a
21 long time because they were not limited, but they had the
22 same authority as the governor and the same trappings as
23 the governor.
24 So that's just a little ten-minute update. And I thank
25 you all without going to sleep. We will have a quiz on
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1 this at about 11:30.
2 GOVERNOR BUSH: Thank you, Bob. Thank you very much.
3 We're in transition. The legislature has the enabling
4 ability that will implement the people's will, and you may
5 have seen a little bit of conversations of that taking
6 place this year.
7 Commissioner Nelson has some opinions on that subject
8 that generated a lot of interest during the session. And
9 this session, I guess I'm not sure, but I assume there
10 will be some discussion about taking the people's will
11 through the initiative process and turning it into
12 reality.
13 And I do believe that it takes the best of the Cabinet,
14 and also there is an expectation that the Chief Executive
15 Officer of the state government should have
16 responsibilities. So I think it's taking the best of both
17 systems and creating an even better system than the one we
18 have today.
19 So I'm excited about working with the Cabinet and
20 legislature to implement the people's vision of how state
21 government should work. We'll see how it works. I hope
22 it works out smoothly in a non-partisan way.
23 Commissioner Nelson, could you give us a brief
24 description of the awesome duties you have as
25 commissioner, treasurer, fire marshal, and whatever you
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1 got on your plate?
2 Speaking of fire marshal --
3 COMMISSIONER NELSON: The state treasurer is the
4 constitutional job. The duties of state insurance
5 commissioner and state fire marshal are attached by
6 statute.
7 So the constitutional amendment that Bob Butterworth
8 just told you about takes the constitutional job of
9 treasurer and comptroller and merges them into the new
10 position of chief financial officer.
11 The Governor was referring to the controversy that had
12 arose in the last legislative session of what will happen
13 with insurance commissioner. And this was a proposal in
14 the legislature to suddenly take it away from the elected
15 insurance commissioner and to make it appointed and I
16 believe that a future legislature will decide that.
17 My own personal opinion is that it clearly should
18 continue to be elected. And I would advocate that the
19 legislature would do with the new chief financial officer
20 just what they have done with the state treasurer for the
21 last 85 years and have the insurance commissioner attached
22 to that elected constitutional officer. The state
23 treasurer invests about $11 billion a day.
24 State insurance commissioner, you have got a pretty
25 good idea, being from South Florida, understanding all the
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1 trauma that we have gone through and the chaos of the
2 aftermath of Hurricane Andrew.
3 State fire marshal appropriately introduced by the fire
4 truck going by just now, one thing that you don't know is
5 that we do most of the arson investigation in the state.
6 And it was part of the arson investigators, for
7 example, under the leadership of Tim Moore, who is here as
8 the head of the Florida Department of Law Enforcement,
9 that broke the case of the bomber at Florida A & M
10 University through their meticulous investigation of
11 finding the pipe fragment, and then figuring out where
12 that pipe came from, and then tracing it back to the
13 specific moment, getting the surveillance camera
14 photograph, and suddenly they had a picture of the
15 bomber. And for that, of course, is a great success story
16 of state government in bringing to justice with the arrest
17 of that suspect.
18 Thank you, Governor.
19 GOVERNOR BUSH: Thank you.
20 Commissioner Gallagher, can you briefly give us --
21 COMMISSIONER GALLAGHER: Be glad to, Governor.
22 Public education is basically a function and
23 responsibility of the State. The State has the
24 responsibility for establishing standards and regulations
25 to ensure an efficient operation of all schools and
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1 adequate education opportunities for all students.
2 And it is the State Board of Education that consists of
3 the entire Cabinet and the Governor. We sit as the chief
4 policy making and coordinating body for the public
5 education in Florida. And we, sitting as the State Board
6 of Education, have the authority to adopt rules, to
7 implement the provisions of law and to improve the state
8 system of public education.
9 Some of the duties of this board are as follows, and
10 that is, to adopt comprehensive objectives for education
11 to adopt long-range plans and short-range programs for
12 public education to exercise general supervision of the
13 Department of Education as necessary to ensure to adopt
14 for public university and community colleges minimum and
15 uniform standards of college level skills.
16 We create advisory bodies as required by law or as it
17 finds necessary for the improvement of education, and we
18 recommend that the district school board take actions
19 consistent with the state board decision related to the
20 appeal of charter school applications.
21 The Department of Education also acts as the State
22 Board of Education. Separately, as the Commissioner of
23 the Department of Education, I'm responsible for many
24 other areas. The Commissioner of Education has the duties
25 to advise as to matters pertaining to education and to
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1 recommend to the State Board of Education actions and
2 policies to be acted upon or adopted.
3 Commissioner of Education serves as a member of three
4 boards, the State Board of Education, the Board of Regents
5 and the State Board of Community Colleges. Within the
6 Department of Education we handle such issues as teachers'
7 certification for the 140,000 teachers that are certified
8 in Florida to teach that are actually teaching the
9 curriculum and assessment for all of our schools
10 throughout the state, the 3,000-some schools, the
11 administration of the Great Future Scholarship Program
12 that gives every high school student that has a B average
13 a chance at the university system and to provide the
14 funding for the K through 12 schools throughout the
15 state.
16 That's a little overview of the Board of Education.
17 GOVERNOR BUSH: Mayor, are you going to go look at the
18 fire or is everything cool? Okay. You got it under
19 control.
20 General Milligan.
21 GENERAL MILLIGAN: Thank you, Governor.
22 As the comptroller, let me first address a little
23 something on the resolution that the Attorney General
24 brought forth at the start of this meeting. Not an
25 oversight by any stretch of the imagination, but I think
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1 an important point to make about Fort Lauderdale and
2 Broward County, and that is in my former life I was a
3 United States Marine. And I, like Major Lauderdale, would
4 sail on the New River and tie up at Port Everglades and
5 always found Fort Lauderdale and Broward County to be a
6 welcoming community to the men and woman that serve our
7 country. And they, I think, take a special pride in
8 that.
9 Last week was fleet week here in Fort Lauderdale, and
10 it is really a tribute to this community, the extent that
11 they go to to recognize the men and women that serve this
12 country. And I just wanted to make that personal thanks
13 to you for what you do, the extra mile that you do go.
14 As the Comptroller, as the Treasurer indicated, I too
15 have a constitutional responsibility and then a shared
16 responsibility as a result of statutory jobs given to me.
17 The constitutional side as the controller or comptroller,
18 depending on which pronunciation you prefer, is basically
19 the responsibility for auditing and accounting for that
20 close to $50 billion budget that the Governor likes to
21 talk about. And that in itself is an awesome
22 responsibility.
23 And as I think some of you know, most recently here at
24 some significant impacts in Fort Lauderdale at Port
25 Everglades. The other side of the house, the statutory
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1 responsibility, the Department of Banking and Finance is
2 safety soundness really in the financial services industry
3 in the state.
4 And with that, it's probably a good time to just
5 mention that the focus for the past year or so has been
6 very much on the Y2K challenge. And within the State of
7 Florida, the banking and finance community, those areas
8 that I am responsible for I can say without reservation
9 they are compliant in terms of the Y2K.
10 And I would like to use this opportunity to acknowledge
11 Governor Bush's effort to really make it more than just a
12 governmental State of Florida government effort on Y2K and
13 his initiative to really look at it as a public private
14 requirement and effort and the focus that he has brought
15 on Y2K.
16 And what you will see over the next several months to
17 try to have the citizens of Florida understand exactly
18 what the situation is in terms of the Y2K situation. From
19 my own perspective, though, in the Department of Banking
20 and Finance, I can say without reservation that we are in
21 very good condition in the State of Florida. And that is
22 kind of in a nutshell.
23 GOVERNOR BUSH: Thank you, General.
24 Katherine.
25 SECRETARY HARRIS: As Secretary of State, I'm only
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1 reminded as I was campaigning before I was elected that
2 when I came down here, someone interrupted me in the
3 middle of a speech and said, I just don't know why you
4 have to campaign so hard and raise all this money to just
5 be the governor's secretary. So I am always thrilled to
6 explain that it's a little more.
7 Actually, the Office of the Secretary of State is very
8 exciting from a number of prospectuses. I was with
9 General Butterworth last night, and he reminded me that we
10 are indeed the keeper of the seal, so we have very, very
11 important responsibilities.
12 But there's seven divisions in the Department of
13 State. We're a record keeping body. We're even referred
14 to in the Hague Convention as the recipient for foreign
15 nationalities. But the first is in the international
16 affairs.
17 If Florida were a nation, our GEP would be running 16th
18 in the world. So what we're trying to do with the
19 Department of State in that the Governor has an economic
20 development with enterprise that we are looking at Florida
21 as his state department.
22 We need to be thinking more in that venue. As
23 referenced earlier, we're talking about the FTAA. It's
24 twice that of the EU, and the EU moved from being
25 temporary to permanent. They went from 700 jobs to
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1 26,000. The opportunities are extraordinary.
2 As record keeping, we have reference to all the
3 agreements that are assigned to other nations in terms of
4 the international affairs, like the Florida, Korea or U.S,
5 Southeast U.S., Japan, arrangements that have been around
6 for decades. Lieutenant Governor Brogan just returned
7 from Asia, which was very, very important, and well be
8 hosting Korea next year.
9 We also have the gulf states which border the gulf.
10 And five months ago we negotiated to have the permanent
11 secretariat in Tampa, Florida.
12 We also host international affairs. We're responsible
13 for all the UN. We have the largest counselor corp in the
14 country, which is very important. Many of these counselor
15 members, we also have the sister states relationships,
16 which Fort Lauderdale has been very, very proactive.
17 And this is the background. These are the relational
18 opportunities we have to develop economic development with
19 the regard to international trade.
20 The second division is the division of cultural
21 affairs. This is very important, just as you saw today,
22 the Florida Singing Sons Boys Choir, boys singing group,
23 because we sponsor groups like that with regard to
24 grants.
25 This grant making process is known as the best in the
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1 country. It's highly accountable. So the projects are
2 ranked, they are matched with local funds, so you have
3 local support, and you can make sure that the taxpayers'
4 dollars are leveraged in the best way possible, they're
5 turkey proof.
6 The Governor has been using it as an example, and we're
7 perfecting that with regard to best practices. But this
8 is an economic base as well, because those who are
9 visiting a cultural event, our eco-tourism, they spend
10 38 percent more than they do in regular leisure
11 activities. So we're focussing on what a billion dollar
12 industry that have never had the opportunity to come to
13 light.
14 And also there is an advantage when you incorporate
15 throughout the education system, you will raise SAT points
16 68 points. And certainly with kids at risk we have
17 opportunities, because in Tallahassee we had the
18 Tallahassee Boys' Choir, which is probably the hottest
19 ticket in Tallahassee. They sang at the governor's
20 inauguration. These are the 120 young men who were
21 juvenile terrors, but today they are very disciplined.
22 They maintain a B average, and the Pope has invited them
23 to come sing at the Vatican, so you know these young men
24 will never, ever be the same.
25 One other thing we also have the international
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1 outreach. We accompanied the Governor on his Mexico
2 economic mission, which was the most significant economic
3 mission we have ever had from the State of Florida that
4 Mexico ever received.
5 Afterwards we brought 50 cultural executives over. We
6 had gifts and they did the Eddie (phonetic) dance. It was
7 a national event. So we're developing relationships that
8 will foster trade. And they told us it will take about
9 five years to sign them, and we did it in the first three
10 minutes.
11 So we're really thrilled that we have our historic
12 resources department. We have a heritage that's older
13 than our nation, and everyone thinks that is a new state.
14 So we have the opportunity to really market that again,
15 that first eight percent increase on historic tourism,
16 we're going to advocate -- we run the main street program
17 out of historic resources, which is $313 million that have
18 been reinvested and the State just invested 4 million and
19 some 300 projects are hosted by 74 communities, and we
20 think that's very important.
21 And with regard to our libraries, we just announced
22 yesterday here at the library, a partnership with the
23 Governor's Mentoring Program. We have 450 libraries. We
24 could make the Governor's goal of 200,000 volunteers just
25 in libraries alone. The opportunity is there to mentor
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1 these children on a level of a healthy and safe playing
2 ground, so we're looking forward to looking for that.
3 We just received $10 million from Bill Gates from his
4 learning foundation that will go to our neediest
5 communities and the funding for libraries.
6 The legislature was also very generous, and they gave
7 us $500,000 in literacy programs so that we can foster
8 those programs in that wonderful environment.
9 Three more divisions. Quickly, elections, which we're
10 responsible for the integrity of the process, and we have
11 8.3 million voters. Some 700,000 hits occurred on
12 election night.
13 And I'm really thrilled to see the kids voting group
14 from Broward, that you're active and involved and want to
15 be a part of the process. We think that's very important
16 to engage this generation in Generation X and we do that
17 through the Internet.
18 We also have those technologically sound and on-line
19 facilities for elections, corporations and licensing and
20 corporations. We have more corporate filings than
21 anywhere else in the country, more than Texas, more than
22 California or New York, even some regents combined. We
23 have over 5,000 phone calls a day and 18 million hits a
24 year that we address.
25 Finally, licensing, we have five security officers per
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1 thousand residents in Florida, so we think we have the
2 opportunity to help FDLE leverage their funding the best
3 way possible. This industry grew 37 percent last year, so
4 we're proud to be able to take care of the record keeping
5 in that regard as well.
6 Thank you, Governor.
7 GOVERNOR BUSH: Thanks, Katherine.
8 Commissioner Crawford.
9 COMMISSIONER CRAWFORD: Governor, I see Rachel is still
10 sleeping after all these presentations.
11 The Department of Agriculture Consumer Services is
12 diverse. We have 12 divisions. I won't go through all of
13 them, but we have 4,000 employees that we have primary
14 regulatory responsibility of food from the very time the
15 seed goes in the ground to the farmers to the time that it
16 arrives at your food stores, something like 36,000 retail
17 food markets. So we regularly inspect throughout the
18 state and we inspect it for proper pesticide use at the
19 farm level.
20 Our division of forestry, we manage over a million
21 acres of state forest land. That's where the airplanes
22 come into being, but then our consumer division in which
23 the -- a big responsibility that we have, we receive over
24 700,000 consumer complaints throughout the state that we
25 help solve, and we're very involved in Broward County with
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1 seminars, particularly in retirement communities, about
2 telemarketing fraud and other consumer problems. So we
3 kind of handle that array of things and got some great
4 employees to make it work.
5 We're glad to be here today. Thank you.
6 GOVERNOR BUSH: Everything else that is not done
7 directly under the supervision of one of these very fine
8 elected officials or jointly through the people that are
9 now going to present to us most of everything else at
10 least flows to the Governor.
11 What else hasn't been talked about? I'm normally the
12 person responsible for it. You can call me and gripe.
13 E-mail me actually be an easier way to get me, Jeb at
14 Jeb.org, State Board of Administration.
15 Tom, if you could just give us a brief summary of what
16 you do, it's kind of a quiet part of state government, but
17 it's an awesome part of it in terms of its responsibility.
18 MR. HERNDON: Yes, sir. Thank you, Governor.
19 For the members of the audience, the State Board of
20 Administration is the agency of Florida government that
21 invests money for state agencies and local governments.
22 In conjunction with the State Treasurer's Office, as
23 Commissioner Nelson alluded to earlier, we invest all
24 state government money from overnight securities to
25 long-term obligations. Currently we invest money on
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1 behalf of approximately 25 clients whose aggregate assets
2 under management are $120 billion.
3 The largest client is the Florida Retirement System,
4 whose assets are currently valued at about $95 billion.
5 And for those of you who are not familiar with the Florida
6 Retirement System, it is a consolidated retirement system
7 that all employees of state government, county government,
8 some cities, school boards and all of the special
9 districts throughout the State of Florida are members of
10 the Florida Retirement System.
11 So in total, there are 600,000 active members of the
12 Florida Retirement System and 150,000 retirees who are
13 currently drawing checks.
14 We're a little unique in one respect because the staff
15 of the State Board of Administration reports to a board of
16 trustees. And the board of trustees is a subset of this
17 Cabinet sitting here this morning. The Governor is our
18 chairman. The commissioner of insurance, treasurer, is
19 our treasurer, and the comptroller is our secretary. And
20 those three gentlemen as trustees have a fiduciary
21 obligation under the law to the members of the Florida
22 Retirement System and the retirees to act prudently on
23 their behalf and manage the investments on their behalf.
24 Our agenda this morning, which will be taken up by the
25 three trustees, is composed primarily of recommended
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1 amendments to our total fund investment plans. For those
2 of you who manage assets or hire money managers to manage
3 assets for yourself and retirement are probably familiar
4 with retirement plans. And that retirement
5 plan essentially outlines the practices and the policies
6 that you hope to follow as your money is managed on your
7 behalf.
8 Essentially, that's what our total fund investment plan
9 is. It is a broad policy document that defines and
10 specifies our investment parameters and our policies.
11 Now, pursuant to Statute Chapter 215, the board of
12 trustees adopts and periodically amends its total fund
13 investment plan. Typically this review takes place each
14 year, but was postponed last fall due to a likely action
15 by the Florida legislature in the 1999 legislative session
16 to change the pension system.
17 That activity on the part of the legislature did not
18 occur, and as a constant, we moved forward with our review
19 of the total fund investment plan and are bringing to the
20 trustees several suggested changes this morning, some of
21 which are quite significant.
22 The last time a change was recommended was in June of
23 1999 when we adopted a new benchmark for our fixed income
24 asset class. That's "FOX" (phonetic) for those of you who
25 are not familiar with the jargon and for each of our asset
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1 classes, and we currently have five asset classes through
2 which we invest money, domestic equities or U.S. stocks,
3 foreign equities or international stocks, fixed income or
4 bond, both government and corporate bonds, real estate and
5 cash. Those five asset classes each have a customized
6 benchmark. In other words, it's a measure of our success
7 is how we perform. And periodically, we update that
8 benchmark to make certain that it is current and relevant
9 to our practices.
10 Prior to June of 1999, the last time the plan was
11 amended was in the spring of 1997 when the board of
12 trustees authorized an allocation of high yield bonds. As
13 part of this review, staff has proposed several changes
14 which I will enumerate shortly. But I wanted to stress to
15 the trustees and to the members of the audience that all
16 of these changes have been endorsed by our outside
17 consultant, who we hire a firm out of Chicago, and
18 approved by an investment advisory council.
19 The three trustees each point to lay citizens, all of
20 whom have expertise in investment matters or in the law or
21 in accounting. And we meet with the investment advisory
22 council and go through in much greater detail than we will
23 this morning, proposed changes to our investment policy,
24 proposed actions on the part of the board in the form of
25 investment practices and so forth and have workshops.
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1 The suggestions this morning recommended members this
2 morning have also been the subject of a several-hour
3 workshop that we held earlier in the fall, and as a
4 consequence have been, we think, thoroughly vented by the
5 advisory council and by our outside consultant.
6 And as I indicated, the Governor and trustees have been
7 unanimously endorsed by the advisory council. There are
8 two additional recommended changes to the total fund
9 investment plan that are currently on hold which we hope
10 to bring to you in January, but at this time we're still
11 going through the due diligence homework on those
12 changes.
13 So Governor, that's by way of a shorthand background,
14 and with your permission, I'll move on to the agenda, if
15 that's agreeable. Item Number 1 is approval of the
16 minutes held September 14,1999.
17 GENERAL MILLIGAN: I'll move the minutes.
18 COMMISSIONER NELSON: I'll second.
19 GOVERNOR BUSH: Moved and seconded with out objection
20 is approved.
21 MR. HERNDON: Item Number 2 starts the substantive
22 amendments to section six and seven of the Florida
23 Retirement System Total Fund Investment Plan. The first
24 item, which is 2 Sub 1A, is to adopt a new target
25 allocation for some of the assets classes at the state
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1 board.
2 Governor, again, for members of the audience's benefit,
3 the board has had for several years a fairly aggressive
4 allocation to the U.S. stock market. It has obviously
5 enjoyed a very strong bull market. We still are, and
6 celebrated the tenth anniversary yesterday of that bull
7 market.
8 But concurrent with that, we have seen substantial
9 volatility, and in fact, both political and economic
10 unrest throughout the balance of the world. And all of us
11 are familiar with the crisis that occurred in the economy
12 in Japan and Asia, and the political crisis that occurred
13 in Russia and Latin America and so forth.
14 As a consequence, we have been overweighted, if you
15 will. We have allocated a higher percentage to the equity
16 market than we would typically recommend. And we have
17 been underweighted or less of a percentage to the
18 international market than we would typically recommend.
19 We know that we have been overweighted in the U.S.
20 equity market. Our consultant has told us on many
21 occasions over the last several years that we need to
22 adjust that percentage.
23 But we frankly felt like the time was not right to make
24 that change. And to be honest, that decision has paid off
25 extremely well for the board.
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1 We have been riding the crest of the U.S. equity market
2 for many, many years. We have benefitted dramatically
3 from that, and the fact that we have been underweighted
4 internationally has allowed us to suffer less than some of
5 our peers as a result of the misallocation of the foreign
6 markets. Today, we're recommending that we begin to
7 address that misallocation.
8 We are recommending that our current policy target of
9 61 percent in U.S. equities be adjusted downward to
10 55.5 percent, and that's really comprised of two separate
11 steps.
12 The first is we're recommending and we will
13 specifically talk about in 21 B on this agenda the
14 creation of a new asset class. You know as trustees, but
15 the members of the audience do not, that our private
16 equity holdings, our holdings in firms that do leverage
17 buy-out and venture capital and so forth have sectioned
18 another part of the domestic equity class.
19 So as a consequence, about two and a half percent of
20 that 61 percent is subsumed in domestic equities. We're
21 recommending that that class of assets be spun over,
22 created separately, and that two and a half percent will
23 be moved over there to that separate class.
24 No other change is contemplated. But more
25 significantly is the recommendation that we move from the
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1 current eight percent allocation in international stocks
2 to 12 percent in international stocks.
3 We're recommending that that four percent change or
4 about $3 million come from two sources. Three quarters of
5 it would come from domestic equities, one quarter of it
6 will come from fixed income. And that's what gives rise
7 to the additional reduction in the domestic equities
8 allocation.
9 We would go from 61 minus two and a half and then minus
10 another three percent to reflect the increase, enter in
11 our national equity for a net new target level of
12 55.5 percent.
13 Concurrently, our bond portfolio would go from
14 26 percent to 25 percent. That one percent would be moved
15 over to foreign equities, and we would begin to move that
16 class up from eight to 12 percent of our assets.
17 As I indicated, that's roughly a $3 billion transfer,
18 depending on market values and so forth at the time. So
19 the initial recommendation is to adopt that change in
20 policy and in weights. It is also to adopt new ranges for
21 those respective classes because, as you know, Governor,
22 we, per your delegated authority, operate within certain
23 ranges and we have a pinpoint target that we try to stay
24 balanced at.
25 And so we would recommend to you at this time that
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1 change in domestic equity assets and foreign equity assets
2 and the corresponding change in the ranges.
3 GOVERNOR BUSH: Any comments? This is a significant
4 policy question. I applaud you, Tom, for building strong
5 consensus on this and for the perspective just as we're
6 talking about billions of dollars.
7 And I think people think it's not really related to
8 their own daily lives. This comes into play in a lot of
9 different ways.
10 First of all, the people that are in our pension
11 system, which this is what, the sixth largest pension
12 system in the world, eighth in the world, fourth in the
13 country. We have a lot of people who depend on sound
14 investments so they can retire and use the income.
15 Secondly, the participants in the pension system made
16 contributions into the system. And when we have had a
17 period of underfunded where we had a significant
18 contingent liability, the stock market advised another
19 wise prudent investing has eliminated that overtime. And
20 we've been allowed to lower the contribution rates, which
21 saves taxpayers money.
22 So it directly impacts a lot of people in a lot of
23 different ways. This is one of the more important things
24 that I think at least three of us do as a Cabinet. And
25 this is probably the most substantive thing we have had on
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1 the agenda since I've been Governor.
2 Is there a motion?
3 GENERAL MILLIGAN: I'll move it, Governor, with a quick
4 comment.
5 Obviously in state law our fiduciary responsibilities
6 are laid out quite clearly. And one of the more
7 significant aspects of that law and our fiduciary
8 responsibility is the assurance that whatever changes we
9 do make result in at least equal to or a better situation
10 for the fund that we are responsible for.
11 And so these decisions are not decisions that I take
12 without a great deal of thought and a great deal of care
13 in living up to the law and our fiduciary
14 responsibilities. So I do move and I think we're only
15 looking at section six right now and the changes to Part A
16 of item two.
17 COMMISSIONER NELSON: I'll second it.
18 GOVERNOR BUSH: There's a motion and second. Without
19 objection, it's approved. Thank you, Tom.
20 MR. HERNDON: Item 2 (1) (b), Governor, is a
21 recommendation to create this new asset class called
22 Alternative Investments, which I just alluded to.
23 We will be essentially moving you to two and a half
24 percent of the board's current FRS assets into this new
25 asset class. This represents the private equity portfolio
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1 that the board has.
2 We have about $3 billion in commitments, about 1.9
3 billion in actual disbursements to a variety of private
4 equity funds. We will be looking, as part of the
5 restructuring of this asset class, at other alternative
6 investments for which we have authority, but no action
7 will be taken on any of those without trustee approval.
8 GENERAL MILLIGAN: Also a significant item, and I'll
9 move 1 (b).
10 COMMISSIONER NELSON: Second.
11 GOVERNOR BUSH: Moved and seconded. Without objection,
12 it's approved.
13 MR. HERNDON: Next item is 2 (1) (c), which frankly is
14 not as significant as the first two. We'll get to a
15 couple more significant ones in a second.
16 This is to adopt floating weights for the liquid assets
17 classes in real estate, and alternative investments are
18 relatively liquid compared to the stock and bond market.
19 And what we're proposing here is essentially a strategy
20 that will allow us to measure a performance a little more
21 accurately than we have in the past.
22 GENERAL MILLIGAN: Move 1 (c).
23 COMMISSIONER NELSON: Second.
24 GOVERNOR BUSH: Moved and seconded. Without objection,
25 it's approved.
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1 MR. HERNDON: Item Number 2 is amended to section
2 seven, which recommends adoption of three new performance
3 benchmarks for three of our existing assets classes. The
4 first item, 2 (a), is to recommend a new benchmark for
5 international equities.
6 The Morgan Stanley comp index includes all country's
7 world free index excluding the United States. The reason
8 we are recommending that particular index is, number one,
9 that it is a common index used in pension funds and large
10 investors throughout the word as a measure of performance,
11 but it corrects two problems that we have had for
12 sometime.
13 Our first index did not include Canada in the index.
14 And as a consequence, we were always a little apples to
15 oranges in a mismatch. And secondly, the current index
16 included a mixed weight of 15 percent to merging market.
17 And we were underweighted against that index. And
18 again, we were in a situation where we were doing a little
19 bit of apples to oranges comparisons when you look at our
20 performance against the benchmark. This index has
21 essentially market neutral ratings, which are
22 capitalization, functional capitalization and moves us
23 away from that fixed weighting and gives us a much more
24 accurate benchmark to measure international equity
25 against.
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1 COMMISSIONER NELSON: I'll move the item.
2 GENERAL MILLIGAN: Second.
3 GOVERNOR BUSH: Moved and seconded. Without objection,
4 it's approved.
5 MR. HERNDON: Item 2 (b) is to recommend a two-part
6 performance index for real estate. In this case,
7 Governor, we have used a fairly common index in the real
8 estate market called the Nacrief (phonetic) index, which
9 is a composite of physical buildings that are located
10 throughout the United States that for whom returns have
11 been calculated.
12 And that's been an index that our pension fund and
13 others have used. Unfortunately, that index is not
14 duplicatable. We can't go out and buy the same building
15 that is in the index like you can in a stock index.
16 And as a consequence, it's not a very relevant index
17 for us to use. And furthermore, it is not as broadly
18 covering the commercial real estate market as what we're
19 recommending.
20 What we're recommending is a two-part performance index
21 based on Wilshire Real Estate Securities Index, which is
22 another security consumer price index, plus 450 basis
23 points.
24 So we will use both of those indexes as measures of our
25 performance. We think both of those are more relevant to
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1 our purposes and investable in the sense of allowing us to
2 measure them more accurately.
3 COMMISSIONER NELSON: And I'll move the item.
4 GENERAL MILLIGAN: Second.
5 GOVERNOR BUSH: Tom, what percentage of the real estate
6 portfolio is in reach, and what is in fixed assets?
7 MR. HERNDON: A relatively small portion is in reach.
8 Most of the portfolio is in property. We have been moving
9 away from the reap market, probably a wise decision under
10 the circumstances, but we have always been, I guess, a
11 little bit more firm believer in having a building that
12 you can point to and see a plaque on the front as owned
13 by.
14 GOVERNOR BUSH: There's a motion and second. Without
15 objection, it's approved.
16 MR. HERNDON: Item 2 (c) is to recommend a performance
17 benchmark for the new assets class that you just approved
18 a moment ago for alternative investments. And here there
19 is no standard benchmark in the industry for measuring the
20 performance of alternative investments or private equity
21 investments.
22 So what we have proposed, based on an extensive review
23 of the literature, and finally finding a study that we
24 thought was pretty powerful down at the University of
25 Texas is a premium of the current domestic equities
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1 benchmark that we use for our less equities assets class,
2 which is the Wilshire 2500, excluding tobacco. So that is
3 600 percent.
4 So what we're saying is we would consider our private
5 equity investments successful if they earn at least
6 six percent more than our domestic equity portfolio
7 earns. So if our domestic equity portfolio earns
8 20 percent in 1999, our measure of success would be
9 26 percent in 1999 and essentially that same would follow.
10 COMMISSIONER NELSON: Move it.
11 GENERAL MILLIGAN: Second.
12 GOVERNOR BUSH: Approved and seconded. Without
13 objection, itself approved.
14 MR. HERNDON: Item 2 (d) is again a more technical item
15 that refers back to 1 (c) of the previous item. And that
16 is to adopt the use and performance measurement internal
17 rate of return methodology to assess the long-term
18 effectiveness of long-term investments and real estate.
19 COMMISSIONER NELSON: Move that.
20 GENERAL MILLIGAN: Second.
21 GOVERNOR BUSH: Moved and seconded. Without objection,
22 it's approved.
23 MR. HERNDON: Finally, Governor, we're recommending as
24 part of the total fund investment plan an effective date
25 for those amendments, which is November 1st.
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1 I do want to just make one observation, and that is
2 that the effective date for the transition to this higher
3 allocation and foreign equities and so forth is
4 November 1st. That does not necessarily imply that all
5 $3 billion would be moved over on that day. Obviously
6 we'll watch the market and try and gauge that transition
7 from an economic and market behavior point of view.
8 COMMISSIONER NELSON: And I'll move that item.
9 GENERAL MILLIGAN: Second.
10 GOVERNOR BUSH: Moved and seconded. Without objection,
11 that's approved.
12 MR. HERNDON: That completes the agenda. Thank you.
13 GOVERNOR BUSH: Mr. Zingale.
14 MR. ZINGALE: We're going to go through the
15 presentation of the agency quick.
16 GOVERNOR BUSH: Do that. That will be great.
17 Everybody knows the Department of Revenue though.
18 MR. ZINGALE: Yes. Everyone knows the Department of
19 Revenue. We have three programs, but I think I'll be
20 surprised as most to know that our biggest program is
21 child support enforcement.
22 GOVERNOR BUSH: That's where most people do know you.
23 MR. ZINGALE: That's true. The Department of Revenue
24 received the child support enforcement program about five
25 years ago from what was now Children and Families. We
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1 have 850,000 clients that we serve. But they are three
2 totally different kinds of clients from what you might
3 think.
4 Those that are on public assistance get free service,
5 but the securing of the child support enforcement payments
6 actually not going back to the child, but retained by the
7 state and federal government to compensate for welfare
8 payments.
9 Those that are successful at getting of welfare, former
10 welfare clients, we provide the same services for free.
11 Under those circumstances, they retain child support, and
12 we have those that have never been on assistance. And for
13 a $25 fee we provide full service.
14 What kind of service do we have? It may also surprise
15 you to know that 40 percent of the clients that we deal
16 with come without knowledge of who the father is. So we
17 provide paternity services. That typically involves a
18 genetic test between the father, the child and the
19 mother. We go through a very elaborate procedure to take
20 that evidence and bring it in front of the judge to secure
21 legal paternity.
22 We also go through a financial calculation by looking
23 at the father's income and assets and the mother's income
24 and assets, and based on guidelines that are provided in
25 the statute, arrive at a dollar amount of a support order
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1 that too is presented to a judge, and it determines both
2 an order for support and who the legal parents are.
3 The front end processes are quite time consuming. They
4 provide judicial protection and due process protection for
5 everybody involved in the process. Once we have secured
6 an order for paternity and support, we go through the
7 voluntary collection process, which is receiving the
8 funds, collecting them and distributing them according to
9 the law.
10 Those that don't pay go through a very intensive
11 enforcement collection process. With the passage of
12 welfare reform a few years back, we have been given really
13 substantial tools to enforce child support enforcement.
14 We do it in three directions.
15 We first search out the employer. We have powerful
16 tools to identify both new hires in terms of people who
17 have recently got jobs and also those that are under
18 continuous employment. And with that, we secure income
19 deduction orders and receive a payment directly from the
20 employer to the child.
21 Recently we have been given authority to search
22 financial institution data bases, asset data bases to try
23 to secure where the non-custodial parent's assets are and
24 go through procedures for capturing those to support the
25 child. And finally, we have gotten fairly extensive
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1 locating services that has allowed us to find the
2 non-custodial parents, then go through a range of both
3 administrative and judicial tools to try to secure
4 payment. They may range from driver's license suspension,
5 all the way to incarceration.
6 The purpose of the program is quite simple. It's
7 trying to secure for the child both knowledge of who the
8 legal parents are and have that right for a full lifetime
9 for a child support order. It's an 18-year obligation.
10 Often, many of our clients are children. That
11 surprises a lot of people. But a large portion of child
12 support goes to children. And some of the non-custodial
13 parents are quite surprised to realize that on the
14 average, this is about a $68,000 obligation.
15 GOVERNOR BUSH: Put a human face on this for a second.
16 You described in a very technical way what you do, but
17 this is one of the ugly -- this is the soft underbelly of
18 our state.
19 How many children are qualified to receive child
20 support that don't get it? And it's not because of our
21 inefficiencies. It's just an ugly situation.
22 And this impacts so many Floridians. The greatest
23 number of e-mails I get, and I promise you that Larry Fuse
24 is in this area of tax collection or collection.
25 It is incredible. So it's over a million children.
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1 MR. ZINGALE: 850,000 clients, over a million children.
2 GOVERNOR BUSH: We're 15 million people that live in
3 our state, just to put it in perspective. And dads
4 particularly are negligent in record numbers.
5 It should be a complete outrage. Then we allow it to
6 happen. Then we ask government to try to collect the
7 uncollectable, and it creates real hardship on our
8 budget. But worse than that, it creates real hardship for
9 a significant percentage of Florida's children.
10 And I stop because I don't think you got a sense of the
11 human tragedy that unfolds with us having to try to
12 clean up after an incredible situation. Other states have
13 this problem, but we unfortunately are leaders. We lead
14 a lot of good things in this country, but this is one of
15 the things we should not be proud of.
16 And we got to figure out a better way for dads
17 particularly to love their kids and to provide the kind of
18 support they're supposed to.
19 MR. ZINGALE: I had the human interest type from our
20 employees' perspective when I was going around about two
21 years ago. I was sitting there, and one of our employees
22 was on a terminal, going through, locating services,
23 trying to find a non-custodial parent, because in many
24 cases they hide.
25 And she was in there diligently working away, and I
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1 came up to her station and I said, what are you doing
2 here?
3 She said, I am finding children their fathers. If it
4 wasn't for what I do at this workplace, many children
5 would go through their whole life and never know who their
6 father was. It kind of drives home a little bit what the
7 purpose of this program is.
8 It's gone through tremendous reengineering, and we have
9 got a number of concepts out there to try to change the
10 way we're performing those functions.
11 Second program, and the one associated with our name,
12 is general tax administration. We administer 36 taxes,
13 about $21 billion a year. The good news is that
14 97.7 percent of that money comes in voluntarily. Honest
15 taxpayers out there paying their tax. 72.2 percent comes
16 from sales tax. So about 80 percent of the tax base are
17 primarily coming directly from the business side of the
18 Florida economy.
19 In the past few years, we have focused on major
20 reengineering of remittance processing, taxpayer
21 education, customer service and taxpayer simplification
22 under the desire to reinforce that voluntary compliance.
23 What the Department of Revenue should seek to do is help
24 taxpayers pay what they owe and make it as simple as
25 possible.
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1 Over the next few years, we are going through a
2 continued effort to taxpayer education. We are going to
3 be dealing directly. The director has now shifted over to
4 an outreach program directly into taxpayers to try to find
5 out on a comprehensive basis what problems we're having
6 and how we can learn from them to make their world a
7 little easier. But I want to let the audience know that
8 under the next three years, we'll probably be undertaking
9 the largest change in the way we do business.
10 Currently, those 36 taxes are administered in
11 individual tax at a time. So if you happen to need to pay
12 in 24 of our tax function, then you're going to get
13 registered 24 times. You're going to have to understand
14 24 laws.
15 What we are proposing doing, and it's been in the works
16 for the last three years, is a revamping of our entire
17 computer system. So we are going to register you by
18 taxpayer across the 36 taxes. So you will essentially be
19 one stop on the front end.
20 GOVERNOR BUSH: Over the Internet?
21 MR. ZINGALE: On the Internet. that's going to enable
22 a taxpayer, instead of looking at a 36 targeted directly
23 to what they do. It's going to also enable us, if you
24 overpaid in one tax and underpaid in another tax, to wash
25 that out and try to make the Department of Revenue as
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1 invisible as possible in terms of how you're doing
2 business. It's going to cause a reengineering of our
3 registration process, our department of accounting
4 process, our math audit processes, our refund and
5 collection process.
6 The end result we hope will be a substantially simpler
7 system to deal with. As Larry said is the world wants no
8 contact with the Department of Revenue, but if they have
9 to have one, only one.
10 The last program we have is the property tax
11 administration program. It's a very small program in the
12 department. We only have 124 people, but we are primarily
13 the oversight and the guardian of the property tax rolls,
14 $44.6 billion. The primary funding source for public
15 education system. And our job is to assure equity across
16 those tax rolls.
17 That's a brief summary of the Department of Revenue.
18 COMMISSIONER GALLAGHER: Motion on the minutes.
19 COMMISSIONER CRAWFORD: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Item 2.
22 MR. ZINGALE: Item 2 is our legislative concept for the
23 year 2000. There are 12 of them. Six of them are
24 primarily information sharing. Reduction in duplicative
25 reporting, some glitches and some minor administrative
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1 procedures. And I'm going to skip over those.
2 There are six of them, though, that we had interest on
3 that I would like to summarize, then we're probably going
4 to make a motion to have them all adopted as one. The
5 first, a legislative concept deals with family violence
6 protection, putting a human side on it. Many of these
7 families that are in child support enforcement are there
8 by a number of mechanisms and need protection from their
9 spouse.
10 The federal law requires us to maintain a registry and
11 share an international registry of who these clients are.
12 We are provided a vehicle for flagging potential
13 situations of violence.
14 We are asking in this legislative concept to expand
15 that authority to include court orders and domestic
16 violence to be able to put that flag on where there is a
17 statewide verification system if that comes up and reveals
18 a situation we would like to use the flag in those
19 situations.
20 The second one is kind of a strange one, but it deals
21 with the establishment of paternity. Who are the legal
22 parents involved here?
23 The Florida Constitution allows for a right of a jury
24 trial in those situations. The federal government on the
25 other hand prohibits us from having a jury trial in the
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1 establishment of paternity.
2 The federal government has a big stick. It's one
3 little section in their law, and that big stick can weigh
4 about a $700 million in sanctions. They apply that
5 sanction in a lot of situations.
6 A while back we were getting our computer system
7 certified. If they didn't, if the SDU isn't up in time,
8 they throw the stick in. And this is one of those
9 situations where our statute is in conflict with the
10 federal law. And they have the ability to issue that
11 stick.
12 Until recently, we have never seen the federal
13 government use that big stick but with the computer
14 certification situation. They have started to sanction
15 states very heavily in terms of failing to comply with
16 these results.
17 And we worry that they could use this stick in this
18 situation. We basically have three alternatives.
19 Alternative one is to petition the federal government for
20 a waiver. We have begun that. We have asked for a waiver
21 from the situation.
22 Other states have asked for a waiver and not been
23 successful. We'll hope that we can put some argument in
24 front of them that will allow them to adopt it, but in the
25 meantime, we have two other choices. One is to amend the
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1 constitution and the other is to go in front of the
2 Florida legislature to remove the rights to a jury trial
3 in a paternity situation.
4 That was the law, and it was overturned by the court.
5 And the court said we needed to establish a reasonable
6 alternative test if we were going to waive that
7 constitutional right. We believe today that with the
8 genetic testing procedures and also the ability to sit in
9 front of a judge for final determination provides that
10 reasonable alternative relief. And so would like to take
11 this concept to the Florida legislature one more time and
12 see if we can amend the Florida Constitution.
13 I'm going to skip three and go to four. Four is one of
14 those efforts we make to try to get tax filing a little
15 more simpler. It's alternative filing for gross receipt
16 tax reporting.
17 Currently we have 3,500 tax filers. 1,500 of them pay
18 $587 million a year, and 2,000 of them pay $500,000 a
19 year. Those that are paying $500,000 a year on the
20 average are paying about $25 a month and having to fill
21 out and do all this reporting monthly.
22 That's a fairly small amount to deal with, so we would
23 like to propose a legislative concept that will allow us
24 to work with them to develop quarterly filing and all
25 filing to make that simpler.
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1 Item number six deals with the three-year statute of
2 limitation. Prior to last session, the statute of
3 limitation on an audit was five years. Last year the
4 Florida legislature came in and said from 1999 tax year
5 forward, it would only be a three-year statute of
6 limitation.
7 When the year 2002 -- That's kind of hard to
8 say.-- comes around, the phasing in of the three-year and
9 the phasing out of the four-year is going to cause a gap.
10 All audits that we would initiate in the year 2003 are
11 going to require an audit for 2002 and audit for 2001 and
12 audit for 2,000. It skips a year and goes to 1998 and
13 will require an audit for 1998.
14 GOVERNOR BUSH: Who figured this out?
15 MR. ZINGALE: It was the legislative.
16 GOVERNOR BUSH: I know. But afterwards?
17 MR. ZINGALE: Afterwards, the realization is that's a
18 very strange way. You would be coming into a company
19 saying, we're going to audit the past three years, skip a
20 year and audit the fourth year.
21 We have got an awful lot of confusion running around.
22 It's early enough when we get to the year 2002, let's just
23 cut off those last years and go with the three-year
24 statute of limitation. And that's what this concept deals
25 with.
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1 The 11th concept deals with 501C3 corporations, and our
2 Florida Statute as it relates to charitable education
3 exemptions from the sales tax.
4 As most of us know, the federal government provides for
5 nonprofit organizations an exemption for paying federal
6 income tax for 501 C3 corporations. In Florida we go
7 beyond that and have very complex statutes that deal with
8 income. Generally in many circumstances you have the same
9 company out there, nonprofit in both going through their
10 payment of taxes and very slight differences in how the
11 calculation works, end up having some of them on one side
12 trying to pay the tax and on the other side, somebody else
13 being exempt from the tax. Very confusing, very
14 controversial.
15 We proposed taking the federal statute and adopting
16 that for the State of Florida. It does have a $23 million
17 hit.
18 This was a legislative concept last year. It didn't
19 pass, but the senate fiscal committee did an interim
20 study. They have recommended that the 501 C3 standard be
21 adopted, so we're proposing putting that one forward
22 again.
23 The last one is a little unusual, but we're trying to
24 get ahead of the curve in this very difficult way that
25 taxpayers have to go about paying their taxes. Not only
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1 the sales tax having to deal with people inside the state
2 paying, people outside the state paying, but with the
3 local options that exist. In many cases, a company
4 collecting sales tax has to look at a myriad of tax rates
5 to apply, depending upon where the site of payment is,
6 particularly with credit card sales where the delivery
7 point may be different from the purchase point. There is
8 a number of private sector companies out there that have
9 taken the initiative to create software to service and
10 assist these companies in paying their tax. They will sit
11 there and have these transactions interface with their own
12 data bases.
13 And they have very extensive data bases and they have
14 the ability to identify where the potential locations will
15 be of all the sales. They are willing to come in for a
16 fee for a collection allowance, if you want to put it that
17 way, and will serve as the collection agent for any one of
18 these retailers inside or outside the state. They're
19 willing to do that at what we think will be a fairly
20 reasonable cost, and basically take over the collection
21 responsibility for all these retailers.
22 We are simply asking for a pilot, a fairly small
23 reach-out to see if this is a rational way of assisting.
24 It won't be imposed on any retailer. It won't add any new
25 tax.
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1 If a retailer wanted to take this option, it will be
2 voluntary on their part. We propose studying it, entering
3 into a contract, bringing the results back to the Cabinet
4 before we go forward, but we do need legislative
5 permission to deal with that. With that, I would like to
6 propose adoption of the legislative concepts for 2000.
7 GENERAL BUTTERWORTH: Motion.
8 GOVERNOR BUSH: Any discussion? There is a motion, and
9 without objection is approved.
10 MR. ZINGALE: The third item is there has been a lot of
11 concern about the department practices and procedures,
12 where the State's coming and where they're going.
13 I propose having Lisa Echeverria, our Cabinet aide and
14 top lawyer give a brief overview of what that is. And
15 then I think there are six or seven people that are going
16 to come up and provide public testimony.
17 MS. ECHEVERRIA: I'm just going to give you a brief
18 overview. Again, this is just an item for general
19 discussion. It does not require any action on the part of
20 the Governor or Cabinet this morning.
21 The department is required under the Statute 195.062 to
22 assist property appraisers by providing general real
23 property appraisal guidelines and standard measures of
24 value. The current guidelines were promulgated back in
25 1978 and they represent appraisal theories that were
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1 prevalent during the 1960s.
2 They were also promulgated at a time that preceded the
3 use of computer technology in most counties in order to
4 appraise property, which has become known as Mass
5 Appraisal System. And they also preceded Uniform Standard
6 of Professional Appraisal Practices, which were
7 promulgated in the early '80s.
8 The guidelines you should keep in mind are not
9 mandatory for property appraisers to follow. They are
10 provided by the department to assist property appraisers,
11 but they are not required to follow those guidelines.
12 Until late 1997, the Auditor General noted in a report
13 that the department had recognized that many property
14 appraisers had abandoned use of the 1978 guidelines. They
15 have become obsolete. They were not used by property
16 appraisers, the very people that were promulgated to
17 assist.
18 So in 1998, we began to promulgate new guidelines and
19 we created a working group that included property
20 appraisers who represented the six different associations
21 in the state to review working drafts of the guidelines.
22 What was decided through that process was that a great
23 body of knowledge had been created by various associations
24 on methodologies and theories for appraisal, and that it
25 probably would just be a repeat effort for the department
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1 to try and create another body of materials that suggest
2 methodologies for appraisal.
3 And so the guidelines were created to basically
4 reference those well-acknowledged publications that
5 already existed, and they did for the first time mention
6 mass appraisal.
7 Now, mass appraisal, as I mentioned earlier, is
8 basically the development of technology through
9 computerization where values for many properties are
10 taken, sales information is taken, costs for materials is
11 taken, and values for a particular parcel are generated
12 based on this wealth of data that's used through this
13 system.
14 There was some information in the original guidelines
15 that we put forth in some workshops. We held three
16 workshops. Two we had no attendees. The third workshop
17 we held in Tallahassee we had about 30 attendees.
18 There was some concern about language in the guidelines
19 regarding use of mass appraisal systems by property
20 appraisers in defending assessments. We received written
21 comments about that written language and we removed that
22 language from the draft.
23 At this point, we have tried to respond to the comments
24 we've received and meet the concerns of the citizens.
25 There was some concern by citizens with the original
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1 process of working with the property appraisers in
2 drafting the guidelines.
3 And our taxpayer rights advocate has directed the
4 department to hold another workshop in early December so
5 we can again meet with citizens and make sure we have
6 heard all the concerns, that we have reviewed any
7 alternatives that may be proposed and that we can once
8 again, you know, look at this process and make sure that
9 we have met all the citizens' concerns.
10 One of the concerns was that somehow the department, by
11 promulgating these guidelines, is attempting to reverse or
12 subvert the burden of proof that's contained in the
13 statute. That's certainly not the intention of the
14 department.
15 We're looking right now and actually taking language
16 from the statute on the presumption of correctness and the
17 burden of proof standard and putting in these guidelines
18 to make it clear that these guidelines are not to
19 contradict what the statutory burdens of proof that
20 exist.
21 And finally, I wanted to mention that tax watch has
22 created and Ad Valorem Task Force that is studying many ad
23 valorem issues, including the Value Adjustment Board,
24 which is the place where a property owner would take an
25 appeal and appeal an assessment by a property appraiser.
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1 And they are looking at the issue of whether property
2 appraisers follow VAB decisions, how do they alter their
3 systems in response to Value Adjustment Board
4 recommendations. And that is also a forum to explore this
5 whole issue of guidelines and how they relate to the
6 property appraiser's method of appraisal and accounting.
7 Now, we have about eight people who are interested in
8 speaking on the department's development of the
9 guidelines. And I'll just call them one at a time if
10 they're here.
11 Sheila Anderson, she's with Commercial Property
12 Services, Incorporated.
13 GOVERNOR BUSH: Sheila, if I could ask the aide if we
14 can ask the people that are here to express concern about
15 this or have an opinion, if you could avoid repeating
16 yourself.
17 MS. ANDERSON: Thank you very much.
18 GOVERNOR BUSH: You're first, so you won't be repeating
19 yourself.
20 MS. ANDERSON: We asked for ten minutes. We promise
21 not to repeat ourselves.
22 And we would show you some, but not all of the
23 paperwork that will go into detail about what we consider
24 a corrupt process, contaminated documents and impacts not
25 only on taxpayers, but on local governments and on state
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1 funding mechanisms for schools and other programs.
2 We take very seriously what has been going on behind
3 closed doors for 18 months. And you will hear in detail,
4 but we'll have some continuity and then I'd like to wrap
5 it up.
6 MS. ECHEVERRIA: I'm going to go ahead and call up
7 everyone who wishes to speak so they can be ready at the
8 mike. We have Dee K. Mink, Clifford Stein of Saftar
9 Property; Steve Mason, past president of Builders
10 Association of South Florida; Stanley Beck, an attorney at
11 law; David Zackheim, First American Title Company; Robert
12 Traurig, who is also an attorney at law, and then after
13 Sheila Anderson's presentation, Gaylord Wood.
14 MS. MINK: Good morning, Governor and the independent
15 separate Cabinet board. My name is Dee K. Mink, and I own
16 a small commercial real estate company, Mink and Mink,
17 Inc., in Fort Lauderdale. And I wanted to commend you on
18 the education process.
19 I was in a high school last year. I also sponsored a
20 young woman through WEC who wanted to go into business.
21 And for the last three years, I've been the other parent
22 with a younger sister and two small children.
23 So Larry, could I see you afterwards on a personal
24 matter? I found the importance of education not only for
25 our small children, but actually for our high school
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1 children, our young professionals, our small business
2 owners. And actually I found -- for some major
3 corporations, I found a way to continue this process as an
4 unpaid legislature for BOLA.
5 We're an international company. We have headquarters
6 in Washington, D.C., but in Florida, BOLA Florida has over
7 800 members in the state. We have probably the majority
8 of the office buildings we either manage or own in the
9 state. And we're talking from class A down to three or
10 four thousand square foot building.
11 In addition to that, we have numerous vendors, small
12 property owners and allied vendors, whether they're air
13 conditioning, plumbers, and they all own their small
14 businesses and properties.
15 We are here today to tell you that we oppose the
16 proposed rule because it inserts mass appraisal as a new
17 system, which is nothing more than statistical averages
18 and does not provide just value on commercial properties.
19 There is really no uniformity or application of the
20 Florida Statute applied in this draft. You will note that
21 it's not applied. The draft is only talking about
22 statistical averages and compromises our property values.
23 The draft should be thrown out. We have attached
24 numerous letters that we just started from our
25 individuals, colleagues that have given examples of where
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1 they're having problems and their concerns are. And that
2 should be handed out to you. Thank you very much.
3 MR. STEIN: Good morning, Governor, members of the
4 Cabinet. My name is Cliff Stein. I'm commissioner of the
5 Florida Real Estate Commissioner and largest tax roll to
6 property owners throughout the state.
7 I'm here to say that inserting the concept to mass
8 appraisal will cause an enormous tax burden to the
9 taxpayer. The taxpayer will be required to retain experts
10 to prove that the county's mass appraisal techniques do
11 not derive a legal and valued assessment for the
12 taxpayers' individual property.
13 Property is unique, as we all know. It is not a
14 functionable concept capable of broad brush valuation that
15 a mass appraisal standard will cause and accordingly I do
16 not advocate the mass appraisal standard and this new rule
17 should be deleted.
18 GOVERNOR BUSH: You that the mass appraisal standard
19 comprised of this new rule should be deleted.
20 Larry, can you explain why we have a new rule anyway?
21 I'm sorry, Jim.
22 MS. ECHEVERRIA: Well, as I mentioned before, the other
23 guidelines were promulgated in 1978 and they have been
24 largely abandoned by property and tax appraisers as
25 obsolete. They are based on 1970s appraisal practices.
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1 Those guidelines are really meant just to assist property
2 appraisers. Property appraisers have for quite some time
3 been using mass appraisal.
4 The department's guidelines doesn't make that happen.
5 GOVERNOR BUSH: Why do we need to do it? Why do we
6 need to do the guidelines if they don't -- why are we
7 going through this?
8 MS. ECHEVERRIA: The statute requires the department to
9 promulgate guidelines to assist the property appraisers.
10 It does not require the property appraisers.
11 GOVERNOR BUSH: We have those already, right?
12 MS. ECHEVERRIA: We have guidelines that nobody uses.
13 They don't assist anyone. And the Auditor General in 1997
14 pointed out in an audit of the department that they should
15 promulgate guidelines that would assist property tax
16 appraisers because they had a statutory responsibility to
17 do so.
18 GOVERNOR BUSH: Okay.
19 MR. MASON: Good morning, Governor and Cabinet. My
20 name is Steve Mason. I'm here representing the building
21 industry and the housing industry.
22 One of our chief concerns is that there's a lack of
23 uniformity throughout the state on how to achieve these
24 assessments. We're also very much concerned with the fact
25 that we're having partial year assessments done on not
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1 totally completed units. And that has a huge impact on
2 the bottom line of any housing development. This also has
3 the tendency to drive up the affordability of housing
4 because you have to pass on those extra costs to your
5 customers.
6 So we urge you to look at these rules and make sure
7 that they're being applied fairly throughout the state.
8 Thank you.
9 GOVERNOR BUSH: Thank you.
10 MS. ECHEVERRIA: Next we have Stanley Beck.
11 MR. BECK: Good morning, Governor, Cabinet members. My
12 name is Stanley Beck. I'm a tax attorney and I represent
13 taxpayers throughout the state.
14 In order to assure proper funding of the schools, the
15 legislature requires under Florida Statute 195 that the
16 DOR audit the 67 property appraisers throughout the
17 state.
18 In addition, the statute requires that the Auditor
19 General audit the Department of Revenue. Now, the Auditor
20 General's report, which has been referred to, stated that
21 new guidelines were needed in order to achieve
22 uniformity.
23 But in addition, what you haven't been told is that the
24 Auditor General's report states that the Auditor General
25 is not able to express any opinion as to whether the level
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1 of assessment is in compliance an uniform.
2 The Auditor General's opinion -- Excuse me. The
3 Auditor General's report goes on to say that their reason
4 for being unable to express an opinion is because the
5 Department of Revenue has not maintained appropriate
6 documentation.
7 Now, if a public company of this magnitude with a
8 budget of this size lost its audit certification as has
9 occurred in this instance with the Department of Revenue,
10 you would have an SEC investigation, CFO would be toasted
11 and this would be --
12 GOVERNOR BUSH: That's a technical term.
13 MR. BECK: That's a technical tax term, yes, Governor.
14 But the point is that the Auditor General has come upon
15 these things independently, things that we have seen in
16 our own practices. I am told that the next report of the
17 Auditor General, which will come out in the spring of year
18 2,000, will reflect that these situations continue to
19 occur.
20 The report of the Auditor General states that in some
21 instances the Department of Revenue has leaked its test
22 samples to property appraisers. The result of that is the
23 DOR's audits of the property appraisers are totally
24 ineffective. And in some instances, compliance with just
25 value has become optional on the part of property
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1 appraisers.
2 We believe that we need effective guidelines and we
3 need more effective auditing by the Department of
4 Revenue.
5 Thank you very much.
6 GOVERNOR BUSH: Thank you.
7 MS. ECHEVERRIA: David Zackheim from First American.
8 GOVERNOR BUSH: Mr. Zackheim, good morning.
9 MR. ZACKHEIM: Ladies and gentlemen, my name is Dave
10 Zackheim. I am a designated appraiser. My discipline is
11 specifically appraising, so I may be the only one in the
12 room who is a mass appraiser. And I would like to speak
13 to these guidelines that talk about mass appraising.
14 In furtherance of that, I've worked with two county
15 government property appraisers' office. I've done over
16 25,000 petitions to the property appraisal's office and
17 the value adjustment board and I've traveled throughout
18 the entire State of Florida in just about every county in
19 this state representing properties, over 3,000 banks, 200
20 drugstores, 400 franchise restaurants, just about every
21 county in the State of Florida.
22 I'm here to testify that there is no equity in the
23 State of Florida. None. It does not exist. If one of
24 the three elements of that the Department of Revenue is
25 responsible for, as Mr. Zingale indicated, is that the
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1 property tax, which is a very small unit in the Department
2 of Revenue, is responsible for the oversight and guardian
3 of the tax roll. And its responsibility is specifically
4 the equity across the tax rolls in the State of Florida.
5 Not only is there no equity from one county to another
6 county, but there's very little equity between one strata
7 and another strata. This right here is 67 sheets. It's
8 referred to as Table Eight. I'm sure you all know about
9 this.
10 This is the Department of Revenue's statistical
11 analysis of each one of the tax rolls for 1999. This is
12 the current tax roll as the Department of Revenue sees
13 it.
14 I'm not going to mention county names, but I'm going to
15 say this county, 60 percent of the properties in this
16 county are assessed at 95 percent of the level of
17 assessment.
18 By the way, the level of assessment in the State of
19 Florida is 85 percent. When I say 95 percent, I mean
20 95 percent of 85 percent.
21 One of the things that these tables do not tell you is
22 that the old average that used to be in here, that would
23 indicate that a county is at 82 percent or 78 percent or
24 84 percent, that column has been taken out.
25 And this year, the only thing you can find is '95,
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1 '98. That's specifically done so that people in the
2 State of Florida will not understand that the level of
3 assessment in the State of Florida is 85 percent. That's
4 the level that the tax rolls are appraised at.
5 But if 60 percent is 95 percent or approximately
6 83 percent of the market value, where is the other
7 40 percent in this county? Where is the other 40 percent
8 of the property?
9 This county is talking about 39 percent of the
10 properties. Where is the other 61 percent of the
11 properties in that county? This is talking about
12 77 percent of the properties in this county. Well, where
13 is the other 23 percent of the properties in that county?
14 There is no equity.
15 GOVERNOR BUSH: How does the proposed rule impact what
16 you're saying?
17 MR. ZACKHEIM: The proposed rule is designed, Governor,
18 to create guidelines that are going to achieve the ability
19 to create an opinion of value on the part of property
20 appraisers. One of the problems is these guidelines are
21 designed mostly by litigating attorneys. It's not
22 designed by the appraisers.
23 If you remember the previous comments, two of the
24 workshops had no attendees whatsoever. One of the most
25 complicated tax programs in our entire society and the
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1 only one which is based on opinion, the property tax
2 system is the only one that's based on opinion.
3 Everything else is calculatable.
4 Why weren't there attendees at those two workshops?
5 It's because that's where the language was drafted
6 principally by litigation attorneys. That's what our
7 problem is here. The department made a mistake.
8 The USPAP was not drafted in the early '80s. It was
9 drafted in the early '90s. It became statutory in Florida
10 May of 1992. We have got the federal government and the
11 entire appraisal industry drafting a uniform professional
12 standard for appraisers, yet it's entirely ignored by the
13 Department of Revenue.
14 Why, as an appraiser, many of my colleagues don't like
15 to go to an appraisal hearings because they're not based
16 on appraisal techniques. It's based on whether you can
17 get evidence in front of the Special Master or not. I
18 hope, Governor -- I don't normally vent my frustrations.
19 GOVERNOR BUSH: Yeah, you do.
20 MR. ZACKHEIM: I think you know me too well, Governor.
21 But this is a very, very frustrating and I think Mr. Fuchs
22 summed it up at a meeting he had in his office a couple of
23 years ago when he said a very small part of the revenues
24 of the Department of Revenue come from ad valorem insofar
25 as the State is concerned. It's mostly local government,
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1 we know. He says, but I spent over 50 percent of my time
2 with ad valorem problems, and I can understand that. It
3 is frustrating. It's the only tax based on an opinion.
4 I wish this Governor and Cabinet would appoint some
5 professional appraisers, some professional people who have
6 the responsibility of rendering an independent opinion of
7 value and advise you, not these attorneys and not these
8 accountants and these other folks, but people who have
9 actually written the doggone narrative.
10 Thank you very much. And I appreciate the time much.
11 GOVERNOR BUSH: Thank you.
12 MS. ANDERSON: I don't know if Bob Traurig left or
13 not. He spent enough time to get to Tallahassee on I-95
14 this morning and was late for a meeting. But I wanted to
15 acknowledge that he was here on the subject. And so many
16 of you know him.
17 We have concerns not only with the methodology, but the
18 process that is taken into this point. I will tell you
19 that those first two workshops were unattended because we
20 didn't know about them.
21 I will tell you that the next workshop that is being
22 scheduled is meaningless when the decisions being made
23 about what goes into a document are made behind closed
24 doors without public participation. So in the end, the
25 workshops are no more than pandering and they don't solve
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1 the problems.
2 One of the things I would like to commend the Governor
3 on is the Governor's Code of Ethics which I have read in
4 its entirety and find to be comprehensive and very much
5 needed. A suggestion among many that we have to make
6 today would be that the Cabinet adopt this uniform Code of
7 Ethics so all of us might know what is expected of the
8 people and the agencies that work for you. And they might
9 know what we expect of them. Many of the problems we have
10 encountered in this process might have been avoided, if we
11 had such a code of conduct.
12 So I made that suggestion as a priority. We also would
13 like you to throw out this document. It does not satisfy
14 us in any way. We think that you should appoint a
15 committee that will work with the Auditor General to do
16 three things, develop guidelines that amend the 1991
17 document that is in use that we have all had a chance to
18 review that may need some changes but does not have to
19 re-invent the wheel.
20 Number two, we need to have protection for taxpayers
21 throughout the process.
22 And number three, we need to comply with the Auditor
23 General's recommendations. None of that has been
24 discussed at any of the meetings I've attended or in any
25 of the correspondence we have received. It's overdue.
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1 There are other suggestions in the package which probably
2 need legislative attention, and we would like you to
3 review them, Sunshine Law violations, things like that.
4 So I will wind up for us today by thanking you and turn
5 it back over to staff.
6 GOVERNOR BUSH: Thank you, Sheila. And the fact is
7 that you e-mailed me and you have kept me apprised of
8 this. And the reason you're here is that no one in this
9 body wanted to make any process of rule making a sham, and
10 I don't think the Department of Revenue does either. And
11 so your voice has been heard and it will continue to be
12 heard, and we appreciate you coming.
13 MS. ECHEVERRIA: Gaylord Wood.
14 GOVERNOR BUSH: You are one of that 39 percent
15 counties?
16 MR. WOOD: I certainly hope not, but I don't know.
17 Good morning. William Arcam (phonetic) has been the
18 property appraiser. Well, he started out as the tax
19 assessor of this county in 1969 at a time when the
20 oversight of the tax assessors was the sole responsibility
21 of the comptroller.
22 And in 1969 when the legislature passed the
23 Governmental Reorganization Act, the Department of Revenue
24 as well as I think 23 other departments, was created to
25 provide oversight as well as aide and assistance to the
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1 property appraisers.
2 And you have a dual function as the Department of
3 Revenue because on the one hand we see you with your
4 wooden chair and your whip in hand telling us, telling the
5 property appraisers whether or not their tax rolls meet
6 the requirements of law. And I will tell you that the
7 department has turned down, has disapproved tax rolls.
8 We had an interim tax roll in this county in 1980 and I
9 never want to have another one because it was a terrible
10 situation. But you also have the aide and assist function
11 and the proposed rules deal with the aide and assist
12 function as well as the recognition that the existing
13 guidelines which are referred to. Every time I try a
14 case, the taxpayers' attorneys comes out with the
15 guidelines and says, well, the Department of Revenue says
16 you should be doing this, and why aren't you.
17 The guidelines are hopelessly out of date. I think
18 everyone recognizes that. The people whom you have
19 already heard this morning, they make their living
20 attacking assessments. That is to say a tax agent. I get
21 all kinds of mail as the owner of a building, we can lower
22 your tax assessment, lower your taxes for a certain
23 percentage of the savings and so forth. And so this are
24 definite vested interests.
25 GOVERNOR BUSH: Let's be fair about it. A lot of the
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1 people that spoke were property owners, and they make up a
2 chunk of people in our state. They fund our schools. And
3 in fact, I only think Zackheim was the only guy that did
4 what you described. Everybody else there was representing
5 either managing building or --
6 MR. WOOD: Mr. Beck is an attorney who we deal with --
7 GOVERNOR BUSH: I don't know about Mr. Beck.
8 MR. WOOD: -- In the Value Adjustment Board. Mr. Stein
9 I see at the Value Adjustment Board in this county.
10 In any event, on behalf of the property appraisers, I
11 do want to thank you as the Department of Revenue for the
12 aide and assistance which you give us.
13 I recently finished a two-week trial in Brooksville
14 defending the assessment of tangible personal property
15 against a major taxpayer who is also filed suit in Broward
16 County as well as in 16 or 17 other counties in Florida.
17 And we received great assistance from people like Jeff
18 Picker and Steve Keller of your legal staff, Connie Frank,
19 Mike Zeigler of the appraisal staff of the Department of
20 Revenue, as well as Joe Melacam and Mike Kercher
21 (phonetic) of the Attorney General's Office.
22 And this aide and assist function is a logical
23 exception of the guidelines and having sat through the
24 process which saw the introduction of an enactment by you
25 at the end of '97 of the tangible personal property
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1 guidelines. The real property guidelines are simply the
2 logical extension of that.
3 All 67 counties make their real property assessments
4 using mass appraisal techniques. They have to. There
5 isn't enough money in any of the counties to pay for
6 enough appraisers to do individual assessments.
7 So the message that we have is we think the process is
8 quite fair. There is no reason to throw out this draft
9 which is working its way through the process.
10 And by the time a final guideline gets to you as the
11 Department of Revenue for enactment, I think you will find
12 that as in the case of the personal property divide lines,
13 everybody isn't going to like everything they see, least
14 of all me. But it will be a document for the betterment
15 of the taxpayers of Florida.
16 GOVERNOR BUSH: Thank you.
17 MS. ECHEVERRIA: I just want to finish up by saying,
18 Governor Bush, I think you maybe hit on a point, and
19 perhaps at the next workshop we can explore whether a
20 legislative concept to repeal the requirement of the
21 department's promulgate guidelines should be looked at.
22 The guidelines only refer to property appraisers. The
23 draft guidelines only refer property appraisers to
24 establish publications that guide them in the methods of
25 appraisal practices and theories. And you know, so maybe
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1 that's an option that should be explored as well at that
2 workshop that will be held in December.
3 GOVERNOR BUSH: Thank you all very much. And I would
4 encourage you to make sure that you will have the meetings
5 which you have, you really reach out and include
6 everybody. This is a very -- This hits people where their
7 emotions are, property taxes.
8 So I will encourage a more open system, even if people
9 don't agree with you. It's even therapeutic after a
10 while.
11 Department of Highway Safety and Motor Vehicle.
12 MR. DICKINSON: Governor, if I may have a little
13 brevity here, we lunge into our agenda, I think I can
14 cover what you me to cover about our department.
15 And I might add, we're also proud of Bob Butterworth.
16 He's the top executive director in the history of Highway
17 Safety and Motor Vehicles, so we're glad to offer him a
18 home in Tallahassee from time to time. I'm still trying
19 to keep those numbers.
20 Item one is request for approval of our quarterly
21 report. And if I might, let me just quickly run through
22 some items to let you know that I do serve the pleasure of
23 the Governor and Cabinet.
24 My name is Fred Dickinson. And the Department of
25 Highway Safety and Motor Vehicles comprises the Florida
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1 Highway Patrol, the Division of Driver Licenses, the
2 Division of Motor Vehicles where you handle all your tags,
3 titles, mobile homes, emission inspection, as well as
4 commercial vehicles.
5 Then we have our support division, which are the
6 computers, which I think is the largest computer. We have
7 about 15 million vehicles and 13 million drivers in this
8 state. We also enjoy the highest percentage of drivers
9 per population of any state in the union and the highest
10 driving age. And those two items I mentioned, because
11 they're two hot tickets right now, how do we handle the
12 more mature driver, and we have a problem in our state,
13 quite frankly, with fatalities.
14 The Governor keeps asking me how we're doing. Well,
15 this quarterly report will tell you we're about
16 three percent up. We find an inverse correlation between
17 the highway fatalities and unemployment rate. Only when
18 the unemployment rate is down, the fatalities go up, and
19 when the economy is thriving, our driving patterns are
20 just different than when it's the other direction.
21 If I may, Governor, let me just point out we have about
22 5,000 employees in those four divisions. We have about
23 200 locations statewide. That does not include your tax
24 collectors locally to act as our agents in the field, as
25 well as the Department of Revenue and a number of other
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1 departments in collecting fees.
2 We're the number two fee collector behind the
3 Department of Revenue of about 1.3 billion. We have the
4 largest statewide law enforcement contingent.
5 We collect about five million a day. We patrol about
6 150,000 miles a day. We issue about 75,000 vehicle
7 registrations daily. We issue about 16,000 metal plates
8 daily, 20,000 vessels are also titled. We inspect over
9 20,000 vehicles in the six emissions counties, which those
10 of you from Broward would probably like to know that
11 there's some change coming in your emissions program for
12 sure at the end of this year.
13 And I'm not going to stand before you and tell you that
14 it may happen, but there is a strong possibility that the
15 emissions program will be designed where you don't have to
16 participate in it. I don't want to jump the gun, but the
17 Governor has been very instrumental in that.
18 GOVERNOR BUSH: Why is that, Fred?
19 MR. DICKINSON: Actually, we have cleaned the air. The
20 federal government standards we have promulgated have
21 complied with those standards.
22 You have fewer bad days, which is the way they look at
23 it, but Secretary Struhs, there's the guy you ought to be
24 applauding. He's been working hard on this and he knows
25 more about this than anyone in the State of Florida, so
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1 we're glad to have him down here.
2 Quickly, we have about 25,000 driver's license
3 customers come through our doors every day. We dispose of
4 approximately 15,000 court dispositions. We issue about
5 18,000 traffic citations. It's not the bright side of
6 life we want to talk about. And we have hearings for
7 those of us that get stopped for DUI and some other
8 things.
9 Governor, I would like to offer our quarterly report
10 and tell you there is one addendum I mentioned, the tax
11 collectors. You've heard a lot about our Florida Real
12 Time Vehicle Information System. It is up and running.
13 The first day we threw the switch, which was a week ago
14 last Friday, was the highest volume day we have ever had.
15 And the tax collectors have been talking to you and your
16 staffs about this.
17 We have worked hard to cut down the response time for
18 your computer. I commend the Department of Revenue for
19 getting ready to embark on a very ambitious agenda.
20 We found the tax collector is a good partner and we're
21 working hard with them. They're holding our feet to the
22 fire right now. The system is up and running. We have
23 shut down the old system and we're Y2K compliant. So it's
24 taken a little time, but we have a system they're shooting
25 for right now, which is you bring in one name, you have
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1 all the weeks. So we found the common denominator.
2 With that I --
3 COMMISSIONER GALLAGHER: Motion.
4 COMMISSIONER NELSON: Governor, I would just like to
5 make a comment that it's extraordinarily significant that
6 you have moved your uninsured motorist from 30 percent of
7 all drivers to 19 percent. That is a huge savings to the
8 individual consumer on what they pay for uninsured
9 motorist coverage. And part of that was the success of
10 the tax seizure program. If we keep moving that up, it
11 goes exponentially on how much you would save. Thank you.
12 GOVERNOR BUSH: There's a motion and second. Without
13 objection, it's approved.
14 Fred, before you get to the next item, just briefly
15 describe the anti-debris initiative that you're here today
16 with Secretary Barry.
17 MR. DICKINSON: We will be holding a press conference
18 later this afternoon at the Department of Transportation
19 site to try to raise the awareness. It seems you in
20 Broward County, even though you -- we have roadways in all
21 the counties, you all seem to have this roadway debris
22 thing hit you in the windshield with every passing day.
23 And I want you to know from the perspective of the Florida
24 Highway Patrol, the Governor and Cabinet, we have been
25 extremely worried about this.
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1 Secretary Barry, to his credit, has pulled together a
2 task force. And we're just trying to raise the awareness
3 a little this afternoon on that.
4 We have also introduced ourselves with the Florida
5 Trucking Association with the safe driver initiative. And
6 the truckers who have the best eyes and ears, if you will,
7 those that have been three quarters of a million miles
8 without a ticket or crash are going to get a special
9 number and ID, what they call the highway patrol
10 dispatchers. And they're automatically plugged through.
11 The reason we do that is not only because of their
12 experience, but primarily because they know the location
13 of where they are. Folks out on the highway, when they
14 call in on their cell phones, they generally give us a
15 very poor description of where things are happening. And
16 primarily, that's not something they do on a day-to-day
17 basis.
18 The truckers have their GPS systems. They're aware of
19 where they are and the debris. And also, if we have a
20 drunk or a crime committed out there, disabled vehicles,
21 it's a pretty all-encompassing program and we kicked it
22 off last week. The Governor was going to help us with
23 some debris, but I think he's got some other debris to
24 deal with the rest of the day.
25 GOVERNOR BUSH: Going to the Department of Children and
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1 Families.
2 MR. DICKINSON: Governor, I'm not prone to do this very
3 often, but I started mentoring at Rickard High School
4 (phonetic) in Tallahassee about 11 years ago. And the
5 first kid I had, I took him out of school, which was not a
6 good day, but I brought him to the Cabinet one day and
7 showed him how things operated. We took him another day
8 and took him up to the legislature. He did graduate from
9 high school and he was one of the at-risk kids.
10 My wife and I built a home about three years ago, and I
11 noticed this fellow there that looked real familiar with
12 me. He graduated from school. He had a family, but he
13 was working with a builder, had a couple of kids, was in
14 the system. I mean, he wasn't -- he's not out of, but
15 he's working hard, good clean kid. And he's so happy to
16 have a family.
17 And it's funny how things come around, but now the help
18 that I hope I gave him he gave back to us on our house.
19 We're real pleased with it.
20 We have got some other stories. We have been involved
21 in your initiative and support it all the way.
22 Item two is a submission of accomplishment for 1992.
23 COMMISSIONER GALLAGHER: Move Item 2.
24 GOVERNOR BUSH: Moved and seconded. Without objection,
25 it's approved.
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1 MR. DICKINSON: Item 3 is '99, 2000 performance
2 contract.
3 GOVERNOR BUSH: Motion and second. Moved and
4 seconded. Without objection, it's approved.
5 MR. DICKINSON: I'd like to say as you're the son of a
6 former president, I'm a son of one of the six dwarfs from
7 the Cabinet. Look forward to working with you many years
8 to come. Thank you very much.
9 GOVERNOR BUSH: Trustees. Secretary Struhs. How are
10 you?
11 SECRETARY STRUHS: I'm doing real well. And the first
12 time I visited Florida, the population was about
13 three million. Now I'm a new resident of Florida as your
14 secretary, and the population is over 15 million.
15 The way I can best describe DEP's job is to make sure
16 we still have the clean air, the clean water and natural
17 landscape that attracted those 12 million people here in
18 the intervening years. And that's what we did do.
19 In addition to those regular programs, we also serve as
20 staff to us as the board of trustees, as the owners and
21 caretakers of this state publicly held land, both those
22 land underwater and uplands as well.
23 After lunch I'm going to be visiting the Hugh Taylor
24 Birch Island State Recreation Area. And I'd just like to
25 tell you a little bit about that island. It has 400 feet
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1 of beach on the Atlantic Ocean, 500 feet of frontage, a
2 freshwater lagoon filled with native plants, 180 acres.
3 It was purchased by the Board of Trustees in 1945 for one
4 silver dollar.
5 GOVERNOR BUSH: Silver?
6 SECRETARY STRUHS: Silver. One dollar. And it's our
7 hope, and in fact, it's our prayer, that in the year 2053,
8 Floridians look back at this Cabinet and recognize the
9 same wisdom and foresight for all the investments that you
10 all have been making these last several years in doing
11 similar work. That would be a good segue until to our
12 agenda this morning.
13 GOVERNOR BUSH: Is there approval of the minutes?
14 SECRETARY HARRIS: Moved.
15 COMMISSIONER CRAWFORD: Second.
16 GOVERNOR BUSH: Moved and seconded. Without objection,
17 it's approved.
18 SECRETARY STRUHS: Item 2 we would like to defer to the
19 December 2nd Cabinet meeting.
20 GOVERNOR BUSH: Without objection, it's approved.
21 SECRETARY STRUHS: Item 3, we're seeking approval to
22 allow the expansion of the commercial marina.
23 GOVERNOR BUSH: Moved and seconded. Without objection,
24 it's approved.
25 SECRETARY STRUHS: Item 4, we would like to defer this
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1 item to the November 9th Cabinet meeting.
2 COMMISSIONER GALLAGHER: Motion approved.
3 GOVERNOR BUSH: It's been moved and seconded to defer.
4 Without objection, it's approved.
5 SECRETARY STRUHS: Item 5, we're seeking approval to
6 enter into adjoining the plat branch mitigation park by
7 the Fish and Wildlife Conservation Commission.
8 COMMISSIONER GALLAGHER: Moved.
9 GENERAL MILLIGAN: Second.
10 GOVERNOR BUSH: Without objection, it's approved.
11 SECRETARY STRUHS: And then the last and probably most
12 interesting agenda item we have is actually seeking your
13 approval to do three different things.
14 The first is to accept the assignment of a purchase
15 agreement within the Fisheating Creek CARL Project.
16 Secondly, to designate the Florida Commission as the
17 managing agency for that property. And finally, to amend
18 the management policy statement for that project.
19 We have a number of folks who would like to speak on
20 this issue. Allow me to begin just very briefly.
21 However, by noting that this agenda item is completely
22 consistent with the agenda item that the Cabinet approved
23 at their first Capitol For a Day program in Jacksonville
24 on May 25th.
25 This builds on that and is the next step, and it will
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1 acquire approximately 51,000 acres of what is widely
2 recognized as perhaps one of the most significant natural
3 resource areas remaining in the State of Florida.
4 And just if I might, in our business we like to point
5 out that everything is connected to everything else.
6 Fisheating Creek is a tributary to Lake Okeechobee. Lake
7 Okeechobee is where a large portion of the water comes
8 from for the Everglades.
9 So when we make investments and decisions like this, we
10 need to keep in mind that it's all part of a bigger
11 project. And when we look at every restoration, we want
12 to make sure we're remembering these kind of investments.
13 If I could please ask Attorney General Butterworth
14 perhaps to provide a bit more detail. His office, as you
15 all know, has just been extraordinarily helpful in getting
16 this whole thing done and very helpful to us in terms of
17 the negotiations.
18 GENERAL BUTTERWORTH: Governor, members of the Cabinet,
19 as you know, we have been involved with this piece of
20 property for about a decade. And we worked out an
21 arrangement with the owners of the property, as well as
22 the State. And today we have taken another important step
23 to preserving Fisheating Creek as a prime recreational
24 site for future generations of Floridians.
25 In fact, many people in this State, years ago we used
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1 to get our canoeing bags from Fisheating Creek and also
2 did a lot of camping up there.
3 So this part of the State, Fisheating Creek is really
4 very, very well known. In State acquisition of these
5 properties will ensure public access to the Creek while
6 providing the kind of management necessary to the property
7 to maintain its very pristine nature.
8 The state is fortunate to be able to obtain the
9 Fisheating Creek in the terms that are outlined in the
10 agreement. We have a lot of people to thank for this as
11 we go along in the next few moments, but special thanks
12 for DEP, Eva Armstrong, Ed Custorter (phonetic), Terry
13 Wilkerson and John Sanigini for their tireless efforts,
14 and also for George Wilson for all their hard work. And
15 also to the Lykes Brothers Company which helped us come
16 here to this point today.
17 And it must be noted there were other areas that are
18 like Fisheating Creek in this state decades ago, just as
19 pristine, and but the only difference was the owners of
20 those properties were not good stewards of the property.
21 ÿ
22 This was not the case. The Lykes Brothers have been
23 outstanding stewards of Fisheating Creek and the
24 properties around them. That's why it made it so ideal
25 for State acquisition. And over the past few months,
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1 during negotiations, we're very pleased with the way that
2 the State and the owners of the property sat down and
3 worked it out to be fair, not only to the property owner,
4 but also fair to the State.
5 And everybody had the same mission in mind. And I
6 pleased that we do have Hal Ferguson here today, who is
7 the chair of the Board of Trustees and also Charlie
8 Lykes, Jr., who worked on the project, as well as
9 representing the Fish and Wildlife Conservation
10 Commission, Tim Broeg (phonetic).
11 So some of the people might want to make some comments,
12 but it has been something which I believe the State of
13 Florida and Jacksonville, when it's all said and done, and
14 all of our terms are limited out and we're out there
15 writing our memoirs or somebody is ghost writing them for
16 us, this will be one of those things that you definitely
17 want to have a picture of Fisheating Creek in your
18 particular memoirs because this is really the most
19 outstanding water body in the State of Florida presently.
20 And to have State ownership is dramatic. It's one of
21 the most important things we're so proud of. And I
22 mentioned a few people. Of course there were people in my
23 office that were involved in this, and others over the
24 years. Many of us have a real strong sense of pride, and
25 no particular one person takes ownership in this because
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1 it really has been the Cabinet standing up there, the
2 Governor standing up there, and all the agencies to make
3 sure this happens.
4 GOVERNOR BUSH: I think it would be useful to briefly
5 describe what we're talking about doing here. Just let
6 everybody know it's a historic -- we got the map?
7 SECRETARY STRUHS: George Wilson is the
8 vice-president. We weren't sure everybody can see this
9 one.
10 GOVERNOR BUSH: Turn it around the other way. Let them
11 see it.
12 UNIDENTIFIED SPEAKER: I got it on both sides.
13 GOVERNOR BUSH: Sorry.
14 MR. WILSON: Governor, members of the Cabinet, thank
15 you very much. This is briefly a very historic purchase
16 and the 20th anniversary of the CARL Program. This is
17 probably the most significant CARL body ever done in the
18 nine years in terms of species habitat protected in
19 watershed.
20 This first bay represents 94 square miles of watershed
21 in Lake Okeechobee. The property sits west of Lake
22 Okeechobee, all in Glades County, Florida. It's a very
23 historical and the lot that goes from the Kissimmee River
24 to the Collusahachee.
25 This project basically in terms of real estate cherry
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1 picks the heart of their ownership in terms of natural
2 area. It is also adjacent to a 90,000-acre ownership.
3 There are two ownerships that represent a high degree of
4 value in the State ownership. You can go from the Gulf of
5 Mexico to Lake Okeechobee on two ownerships, then the
6 swift mud southwest Florida water management just did an
7 easement of this watershed to the northwest, so it's sort
8 of an area that's coalescing in terms of the conservation
9 plan.
10 There are very few places in Florida that exhibit this
11 type of diversity. It is listed on the federal side of
12 the Everglades projects. It's also a high priority
13 project in the Sable River Program of the South Florida
14 Water Management, so it's on everybody's list, and long
15 has been.
16 Lake Okeechobee is here on the eastern boundary. If
17 you follow the fee corridor some 18,100 actors, that line
18 is over 60 miles of Lake Okeechobee coming up you have the
19 40 center area, which is the largest Aboriginal Indian
20 mound in South Florida. Several hundred acres of mound
21 system. That was also the site of several forts during
22 the early Indian wars of the 19th century. And it was
23 Creek Fort during the early pioneer days.
24 This is a large wetland area, which is the home for
25 Swallowtail Kites. We have pictures in the picture
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1 overview we gave you. They come here in the mid summer.
2 They feed off the bugs, then they fly all the way to
3 Venezuela and South America. It's a key stopover point.
4 Going upstream the Cypress end out here there's marsh,
5 then you have rock lakes opening on some of the picture.
6 This is 27, the famous Lake Campground just west of 27.
7 And further upstream there will be several access points.
8 Lake Okeechobee, there will be a campground site on 27.
9 They will have crossing up just north. So this will be
10 several very important access points for public access.
11 The rainy slue is the area just to the west here. This
12 is a slue that drains to Lake Okeechobee. It drains a
13 significant part of Charlotte County. It's a very
14 important area.
15 That's the fee corridor. The conservation easement
16 areas are five major areas. And we'll just briefly give
17 you an overview of what you're acquiring. It will always,
18 in perpetuity, stay in a natural condition.
19 The first area Squirrel Island, which is a 5,000-acre
20 area in the north end up in here. It covers this. It's
21 scrub.
22 It is the southernmost extended long leaf pine in North
23 America, a pine tree that only grows in southeastern
24 United States. It's an area that the panthers that have
25 been collared that have come across the Collusahachee have
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1 fed. It's a black bear area. It also has Sherman's fox
2 squirrel.
3 It is also in this area that the world's best remaining
4 dry prairie, like you think in your square miles of point
5 prairie that is unlike any other place in the world.
6 And this has the best examples. This first purchase
7 picks up 16,000 acres of that rare habitat. Just north of
8 this is the Lake Wales Ridge, Florida's Sand Mountain.
9 This is the Highland County line. Just west is the
10 Charlotte County line.
11 This is the Lake Wales Ridge that goes up into a little
12 bit of Orange and Lake County. That ridge drains right
13 into this property, so you have sort of an eco-tone, so
14 when you get the wet prairie, it's the end of the Sand
15 Mountain, a very significant elevation change. And that
16 is what has led to special habitat.
17 Rainy slue is very important for wading birds in the
18 west. And then you have Crane Island to the north with
19 square miles of prairie. It's an area that's important
20 for nesting of Bald Eagles.
21 And the last of the major natural areas, the six-mile
22 marsh, which is on the east of the trap. It's over here.
23 It's a major wetland tributary.
24 That's sort of a very quick summary of some of the
25 special natural resources. Hopefully, you will be able to
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1 take a trip over there.
2 The only species that are in Florida are in this
3 property. The entire property is over 240 square miles.
4 There is nothing else like it left.
5 This represents a purchase for the bulk of the money, a
6 one-time purchase. The land states on the tax roll, the
7 management costs are minimum. It's the first CARL to come
8 to the Governor and Cabinet and represents the kind of
9 purchases that other states have done and represents kind
10 of a new way of looking at it where you find the landowner
11 who has prepared a high degree of land use. And what
12 you're trying to do is preserve that high degree of land
13 use that is consistent with conservation, and you can
14 permanently restrict the uses with the ownership, and
15 that's what this does. This is the first of many that I
16 think will come to you in the new era.
17 GOVERNOR BUSH: Any questions?
18 SECRETARY HARRIS: That was a beautiful explanation. We
19 could listen to you talk about it forever.
20 Would you explain just to the public in general, yes,
21 we're only purchasing a fee simple 10,000 acres, but the
22 balance of tat has these restrictions. And that sounds
23 like a lot of money, so would you explain sort of the
24 restrictions and why this is? I mean, you explained why
25 it's so important, the appraisal process.
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1 MR. WILSON: We did a handout. In general, we're
2 buying it as-is, and what the Lykes Brothers left is a
3 very limited agricultural. They cannot plow the land,
4 they cannot plant citrus, they cannot plant sugar cane,
5 they cannot build homes. They have to manage the forest,
6 manage the pine forest.
7 We have taken away out of the 35,000 acres out of the
8 45. They are natural easement areas. We're buying away
9 almost all of their rights. Basically, it's a damage to
10 agricultural land. We're buying all the wetland, all
11 rights. They will continue to burn. If they don't burn,
12 the Game Commission has the right to come in and burn
13 them.
14 The property will be monitored on an annual basis so
15 the rights the public have will be available, it will be
16 available for scientific research. A lot of scientists
17 are drooling. You're requiring 18 public, which is you're
18 buying about 9800 acres of that 18,000. The other is quit
19 claim.
20 So we are buying away 35, almost all rights in the 35
21 acres. They can graze cattle to a minimal degree. They
22 can grow pine trees in a restricted way and they can hunt
23 according to the rules of the State of Florida.
24 They have lost access for their own recreation. They
25 have lost access for all their commercial activities. We
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1 are buying a campground. So that in a lump sum is we're
2 buying away almost all the rights.
3 GENERAL BUTTERWORTH: Governor, just one thing. This
4 piece of property, the creek itself is really the center
5 of the life for Glades County and everybody over the past
6 hundred years, this has been everything important in their
7 lives has taken place really on Fisheating Creek.
8 And I guess ten years ago, Bob, when your staff and I
9 went down there to look at it and we talked to those
10 people there to see the importance of it, to see the
11 people as they talk about it that time.
12 And years ago they got baptized at the river. They had
13 the senior prom at the river. Everything was at the
14 river. It was the whole center of life, everything. It
15 was the whole center of life in the community. And so for
16 that particular community, it will always be available to
17 them and means a lot.
18 MR. WILSON: Thank you. It was a privilege for all of
19 us to be involved in this. We salute the settlement that
20 led to probably the most spectacular event.
21 SECRETARY STRUHS: If I might, Commissioner Crawford
22 might want to speak just very briefly about the role that
23 the forestry department had in this in terms of appraising
24 an assessment, the value of the timber and how it was
25 going to be managed.
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1 COMMISSIONER CRAWFORD: First, let me say we are very
2 proud in the role Forestry played in this.
3 It took a lot of people to make it come together. And
4 the Attorney General and I both got involved in this ten
5 years ago. And as he mentioned, Glades County was my
6 senate district when I was in the senate. And the things
7 that I'm proud of, as I see this is the fact that this
8 land has been a commercial farming operation I guess for
9 the last hundred or so years.
10 And when the state people went on the land to see it,
11 they were just amazed at the quality of conservation
12 that's already been exercised by farmers and the Lykes
13 family. And I think it's a real tribute, not only to the
14 Lykes', but it shows that farming can be a very big plus
15 for the environment to help preserve and conserve. And
16 farmers are the first stewards of the land, and I think
17 this highlights that responsible job that good farmers can
18 do when they love the land, as I think all farmers do.
19 And so I'm very delighted to see this coming about the
20 way it has for the State.
21 SECRETARY STRUHS: We had two other citizens who wanted
22 to speak briefly on the subject, Charles Levy on the
23 Audubon Society.
24 MR. LEVY: Governor, members of the Cabinet, Charles
25 Levy representing the Florida Audubon Society.
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1 A number of years ago, I guess it's been 12 years ago
2 or so, when Governor Martinez and others were first
3 beginning to talk about the Preservation 2000 Program as a
4 concept, the properties in the area of Fisheating Creek
5 were one of the concepts that strongly drove the idea of
6 what ecosystem preservation in Florida could do.
7 And I think it is significant when you look at this
8 piece of property, realizing the extent of it, some
9 22 miles wide, some 12 miles high, there are few things
10 that are accomplished in government that are going to be
11 visible from space on a satellite photograph as something
12 remaining green and preserved in Florida.
13 This is something, Governor, members of the Cabinet,
14 that will be visible from space on a satellite photograph
15 as an accomplishment for protection of the environment in
16 Florida. And I think that the magnitude of it is very
17 difficult to overstate.
18 I'd just like to say that in addition to the
19 accomplishment of the Preservation 2,000 Program, the
20 acquisition of this part of the Everglades ecosystem for
21 future generations, something else needs to be mentioned
22 here too. In addition to the excellent stewardship that
23 has been a hallmark of the way the Lykes Brothers have
24 managed this property for generations, there is, in our
25 view on behalf of the Audubon Society, an important
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1 opening of a new cooperative venture between major land
2 owners, and the State of Florida and environmental
3 groups.
4 And the state itself in terms of the mission of
5 protecting tracts of land such as this, the partnership
6 that will begin on this day and extend into the future in
7 terms of the joint management of the areas you see on the
8 map in tan, which will be purchased in a less than fee
9 configuration, is a very important way for us in Florida
10 to maximize and spread the value of our limited land
11 acquisition dollars and to assure that in addition to
12 state management and state stewardship of this land, there
13 is a continuing handshake between private interests who
14 manage the land and the State of Florida in ensuring
15 preservation in this area.
16 We did it all here. We get preservation of the land,
17 we get continued presence of the beneficial type of
18 agriculture, we get continued presence of the land on the
19 tax base in this community, and we get the assurance that
20 we have a win/win, both in terms of the land owners'
21 interests and in terms of the people's interests and the
22 environment's interest.
23 So we want to thank you, the Governor and the Cabinet.
24 We want to thank the Department of Environmental
25 Protection, the Attorney General's Office, and we want to
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1 thank the Lykes Brothers for making this very important
2 day in terms of the history of protecting Florida's
3 environment possible. This is a big day.
4 It's a big piece of land, one of the biggest and one of
5 the most important steps that can be taken for ecosystem
6 restoration that you're taking here today. Thank you.
7 MR. FERGUSON: Governor Bush, members of the Cabinet,
8 I'm Howell Ferguson here on behalf of Lykes Brothers. I
9 thank you for the opportunity to be here to continue the
10 implementation of the agreement which was finalized in
11 May.
12 John Branson, who was here at the time, asked me to
13 send his regrets that he could not be here today, but he's
14 certainly been here with us from the beginning.
15 I want to echo some of the words of a acknowledgment
16 and thanks that others have done. I certainly salute the
17 Attorney General, his office and staff for this effort, an
18 effort to be creative to find a solution.
19 There have been many people with the state departments,
20 the various agencies, particularly DEP, Division of State
21 Land and the new Fish and Wildlife Conservation
22 Commission.
23 We also extend as part of this, I think we are
24 extending a hand to our neighbors in Glades County, who we
25 have been friends and neighbors with, and we intend to
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1 stay that way.
2 The conservancy has been enormously successful. George
3 Wilson, I think is the poet biologist of Florida. We can
4 listen to him all day. And he has kept us thinking about
5 the big picture.
6 The various employees of Lykes Brothers have for a long
7 time done a good job being a steward. Charlie Lykes is
8 with us here today who has managed this property for a
9 number of years. We have had long and hard negotiations.
10 They have been conducted in good faith and with goodwill.
11 If this were a movie script, perhaps the title would be
12 A Creek Runs Through it. It is part of old Florida. It
13 is beautiful, abundant and pristine, and we are very proud
14 of that.
15 There have been appraisals of this property which you
16 have seen. The numbers are big, obviously.
17 But in many ways, an appraisal is a very blunt
18 instrument, a very unsophisticated instrument in valuing a
19 resource like this.
20 The only value that is put on this land is the value to
21 a private owner, a commercial operation. There is no
22 value put on to the words of George Wilson because
23 appraisals can't do that.
24 There is no value put on to 60 miles of watershed,
25 habitat, pristine conditions. And the only way that you
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1 ever know the value of this property is when you have to
2 start paying to clean up a resource that has been
3 spoiled. And we know the numbers in the Everglades. We
4 know the numbers in Lake Okeechobee and all the
5 restrictions that will come about.
6 So in conclusion, we feel we have been a pretty good
7 steward and we pass this on with respect and confidence to
8 the State.
9 GOVERNOR BUSH: Thank you very much.
10 SECRETARY STRUHS: Somebody would make a motion on that
11 agenda item?
12 COMMISSIONER CRAWFORD: So moved.
13 GENERAL BUTTERWORTH: Second.
14 GOVERNOR BUSH: There is a motion and second. Without
15 objection, it's approved. Congratulations.
16 Well, we're having Cabinet for the day three months
17 from now at some other place. If you all want to come
18 back again, seems like we gather together and talk about
19 this only when we're outside the City of Tallahassee.
20 State Board of Education.
21 Motion on minutes?
22 GENERAL BUTTERWORTH: Second.
23 COMMISSIONER GALLAGHER: Motion to defer Number 2.
24 GOVERNOR BUSH: There's a motion and second to defer.
25 Without objection, it's approved.
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1 COMMISSIONER GALLAGHER: Number 3, Governor, I think it
2 would take a long time. I would like to defer that also
3 until our next meeting in Tallahassee.
4 GOVERNOR BUSH: Motion and second to defer that.
5 COMMISSIONER GALLAGHER: I'd like to withdraw from 4.
6 GOVERNOR BUSH: Without objection, it's approved.
7 There is a withdrawal on number four. That doesn't
8 require action, does it? That was quick.
9 COMMISSIONER GALLAGHER: Thank you.
10 GOVERNOR BUSH: Thank you all very much. We'll see you
11 outside.ÿ
12 (Thereupon, the proceedings were concluded)
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1
2 C E R T I F I C A T E
STATE OF FLORIDA
3 COUNTY OF BROWARD
4 I, DAWN M. WHITMARSH, Registered Professional Reporter,
do hereby certify that I was authorized to and did
5 stenographically report the foregoing proceedings and that the
transcript is a true and accurate transcription of my stenotype
6 notes of the proceedings.
7 I further certify that I am not a relative, employee,
attorney or counsel of any of the parties, nor am I a relative or
8 employee of any of the parties' attorney or counsel connected
with the action, nor am I financially interested in the action.
9
WITNESS my hand and seal dated this ____________day of
10 ______________, 1999.
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12 ____________________________________
DAWN M. WHITMARSH, RPR
13 Notary Public-State of Florida
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