Key Legislative Issues on the Forefront in 2019 – Part II
After Florida’s 2018 general election became the subject of national news, state leaders appear poised to address voting laws this session. Under Florida election law, if one candidate has a margin of victory of less than 0.5 percent over the second-place finisher, those results trigger an automatic recount. If the margin of victory is .025 percent or less, a manual recount is required. A manual recount means that canvassing boards are required to examine ballots by hand that cannot be accurately read by a machine. In most elections, one candidate already has a large enough lead by the time the polls close on Election Day that additional votes that are tabulated later such as overseas military ballots are not enough to tip the scales. The 2018 midterm election in Florida, however, resulted in mandatory recounts for the statewide offices of Governor; U.S. Senator; and Commissioner of Agriculture—with the latter two requiring manual recounts. The 2018 recount was particularly dramatic given the fact that the winning candidate for the Commissioner of Agriculture flipped between Election Day and the end of the recount. Throughout the recount process, voter confidence may have suffered amid allegations of everything from disorganization to voter fraud. In mid-January, the Broward County Supervisor of Elections resigned and the Palm Beach County Supervisor was suspended by Governor DeSantis resulting from missteps in how the recount was handled in those counties. Following a high-profile end to the 2018 election, Floridians can expect to see 2019 legislation focused on improving the integrity of the election process and restoring voter confidence. The Legislature’s interest in the topic is already apparent prior to the official beginning of the Regular Session with the House Oversight, Transparency, & Public Management Subcommittee meeting jointly with the State Affairs Committee for a discussion of election issues featuring a panel of seven Florida Supervisors of Elections.
This session, the Legislature may tackle two separate tax issues that even standing alone would likely each be one of the most significant tax bills passed in the last decade. In June 2018, the U.S. Supreme Court reversed long-standing precedent prohibiting states from requiring the collection of sales and use tax by remote retailers not having a physical presence in a state. This change has sent states scrambling to address the Court’s opinion legislatively and administratively. Due to the restrictions placed on the Florida Department of Revenue by the Administrative Procedures Act, it’s unlikely that Florida could address the Court’s holding administratively. Therefore, the Legislature must act to establish thresholds to protect small businesses from these remote seller provisions. Many agree that the adoption of remote seller legislation will streamline the tax collection and enforcement of use taxes historically due on retail sales. This resulting tax modernization will also present a unique opportunity to the Florida Legislature to offset any potential additional revenues with substantial tax savings, such as reduction of the state’s business rent tax.
Additionally, the 2019 Florida Legislature must address the corporate income tax changes as a result of the 2017 federal Tax Cuts and Jobs Act. Florida’s corporate tax piggybacks the federal system by starting with the federal taxable income. Florida then applies its own tax rate of 5.5%. The Tax Cuts and Jobs Act significantly reduced the federal tax rate but increased the federal taxable income base in a number of areas. If Florida fully adopts with these changes and keeps the Florida rate the same, most corporations will pay more in Florida taxes. Due to timing of the early session in 2018, the Florida Legislature was unable to fully understand and address the impacts of the 2017 Tax Cuts and Jobs Act changes. Understanding and addressing these impacts should be a key focus of the 2019 Legislature.
Assignment of Insurance Benefits
As communities in Florida’s panhandle are still rebuilding after the destruction caused by Hurricane Michael, Florida Chief Financial Officer Jimmy Patronis has warned the public that fraudsters are using the disaster to take advantage of unwary consumers through assignments of benefits (AOB) as they repair their homes and vehicles. An AOB transfers the insured’s rights to make a claim under his or her insurance policy to a third party. Fraud may occur, for example, when a contractor demands cash up front from a homeowner in order to make repairs and then pressures the homeowner to also sign an AOB contract in exchange for the work. Once the assignment is made, unscrupulous contractors then file inflated or entirely fake claims with the insurance company and often also pursue frivolous litigation against the insurer. This results in increased costs to insurance carriers that are ultimately passed on to policyholders. According to the Florida Department of Financial Services, AOB lawsuits have increased sharply over the years. In 2006, there were only 405 AOB lawsuits in Florida compared to a staggering 28,200 by 2016. Consumers are particularly vulnerable to this type of fraudulent activity after a storm when many are dealing with extensive damage to their homes and are desperate to have them repaired as quickly as possible. With the rise in abuse and litigation, it is likely that a legislative fix may be on the horizon.
For questions about Florida’s key 2019 legislative issues, please contact a member of our Government Relations and Lobbying Practice Group.
To read Part I of “Key Legislative Issues on the Forefront in 2019,” please click here.