Senate Bill 1998c1

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    Florida Senate - 2000                           CS for SB 1998

    By the Committee on Governmental Oversight and Productivity;
    and Senator Horne




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  1                      A bill to be entitled

  2         An act relating to state revenue; amending s.

  3         215.5601, F.S.; defining the term

  4         "participating manufacturer"; revising

  5         legislative intent; specifying procedures by

  6         which a tobacco manufacturer may become a

  7         participating manufacturer; providing for

  8         signatories to a specified settlement agreement

  9         to be participating manufacturers; providing

10         for funds received from participating

11         manufacturers to be deposited into the Tobacco

12         Settlement Clearing Trust Fund; providing for a

13         portion of unappropriated funds to be deposited

14         into the Lawton Chiles Endowment Fund; amending

15         s. 210.02, F.S.; imposing a surtax on

16         cigarettes not manufactured by a participating

17         manufacturer, as defined by the act; providing

18         for calculating the amount of the surtax;

19         amending s. 210.20, F.S.; providing for the

20         deposit of proceeds of the surtax; providing an

21         effective date.

22

23  Be It Enacted by the Legislature of the State of Florida:

24

25         Section 1.  Section 215.5601, Florida Statutes, is

26  amended to read:

27         215.5601  Lawton Chiles Endowment Fund.--

28         (1)  SHORT TITLE.--This section may be cited as the

29  "Lawton Chiles Endowment Fund."

30         (2)  DEFINITIONS.--As used in this section:

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  1         (a)  "Board" means the State Board of Administration

  2  established by s. 16, Art. IX of the State Constitution of

  3  1885 and incorporated into s. 9(c), Art. XII of the State

  4  Constitution of 1968.

  5         (b)  "Endowment" means the Lawton Chiles Endowment

  6  Fund.

  7         (c)  "Earnings" means all income generated by

  8  investments and the net change in the market value of assets.

  9         (d)  "Participating manufacturer" means any

10  manufacturer of tobacco products which meets the requirements

11  of subsection (4).

12         (e)(d)  "State agency" or "state agencies" means the

13  Department of Health, the Department of Children and Family

14  Services, the Department of Elderly Affairs, or the Agency for

15  Health Care Administration, or any combination thereof, as the

16  context indicates.

17         (3)  LEGISLATIVE INTENT.--It is the intent of the

18  Legislature to:

19         (a)  Provide a perpetual source of funding for the

20  future of state children's health programs, child welfare

21  programs, community-based health and human services

22  initiatives, and biomedical research activities.

23         (b)  Ensure that enhancement revenues will be available

24  to finance these important initiatives.

25         (c)  Use funds received from the Tobacco Settlement

26  Clearing Trust Fund moneys to ensure the financial security of

27  vital health and human services programs.

28         (d)  Encourage the development of community-based

29  solutions to strengthen and improve the quality of life of

30  Florida's most vulnerable citizens.

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  1         (e)  Provide funds for cancer research and

  2  public-health research for diseases linked to tobacco use.

  3         (f)  Provide tobacco manufacturers the opportunity to

  4  voluntarily participate in mitigating the impact of the use of

  5  tobacco on the residents of this state.

  6         (4)  PARTICIPATING MANUFACTURERS; QUALIFICATIONS.--

  7         (a)1.  A tobacco manufacturer may become a

  8  participating manufacturer by entering into an agreement with

  9  the Attorney General which provides for the following:

10         a.  Elimination of the manufacturer's outdoor

11  advertising and transit advertisements at the earlier of the

12  expiration of applicable contracts or 4 months after the date

13  the final list of outdoor advertising signs is supplied to the

14  Attorney General. The manufacturer shall provide a final list

15  of all its outdoor advertising signs and transit

16  advertisements to the Attorney General within 45 days after

17  entering the agreement.

18         b.  Support of the state's efforts to mitigate the

19  impact of the use of tobacco through annual payments to the

20  state. On January 1 of each year, the Division of Alcoholic

21  Beverages and Tobacco of the Department of Business and

22  Professional Regulation shall calculate the payment amount,

23  which is due by January 31 of that year. The payment amount

24  shall be based on the number of cigarette packages delivered

25  to wholesale dealers for sale in this state by the

26  manufacturer from January 1 until December 31 of the prior

27  year. The payment amount per package shall be calculated as

28  the total annual payment due to the state pursuant to the

29  settlement agreement in the case of The State of Florida et

30  al., v. American Tobacco Company et al., divided by the total

31  number of packages delivered to wholesale dealers for sale in

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  1  this state by the four settling manufacturers during the

  2  previous 12 months, rounded to the nearest tenth of a cent.

  3         2.  Cigarettes produced by each manufacturer that fully

  4  complies with the agreement entered into with the Attorney

  5  General under subparagraph 1. and makes the annual payment by

  6  January 31 are exempt from the surtax on cigarettes imposed

  7  under s. 210.02(6) for the subsequent 12-month period.

  8         (b)  All tobacco manufacturers that are signatories to

  9  the settlement agreement entered on August 25, 1997, in the

10  case of The State of Florida et al., v. American Tobacco

11  Company et al., and the settlement agreement entered on March

12  15, 1996, in the case of State of West Virginia, State of

13  Florida, State of Mississippi, Commonwealth of Massachusetts,

14  and State of Louisiana v. Brooke Group Ltd. and Liggett Group,

15  Inc., are participating manufacturers. Cigarettes produced by

16  each such manufacturer that fully complies with the applicable

17  settlement agreement and makes the annual payment required

18  under the agreement by December 31 are exempt from the surtax

19  on cigarettes imposed under s. 210.02(6) for the subsequent

20  12-month period.

21         (c)  Funds received from participating manufacturers

22  shall be deposited into the Department of Banking and Finance

23  Tobacco Settlement Clearing Trust Fund.

24         (5)(4)  LAWTON CHILES ENDOWMENT FUND; CREATION;

25  PURPOSES AND USES.--

26         (a)  There is created the Lawton Chiles Endowment Fund,

27  to be administered by the State Board of Administration. The

28  endowment shall serve as a clearing trust fund not subject to

29  termination pursuant to s. 19(f), Art. III of the State

30  Constitution and shall be funded by settlement moneys received

31  from the Tobacco Settlement Clearing Trust Fund industry. The

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  1  endowment fund shall be exempt from the service charges

  2  imposed by s. 215.20.

  3         (b)  Funds from the endowment shall be distributed by

  4  the board to trust funds of the state agencies in the amounts

  5  indicated by reference to the legislative appropriations for

  6  the state agencies, except as otherwise provided in this

  7  section.

  8         (c)  The state agencies shall use the funds from the

  9  endowment to enhance or support increases in clients served or

10  in program costs in health and human services program areas.

11         (d)  The Secretary of Health, the Secretary of Children

12  and Family Services, the Secretary of Elderly Affairs, and the

13  Director of Health Care Administration shall conduct meetings

14  to discuss program priorities for endowment funding prior to

15  submitting their budget requests to the Executive Office of

16  the Governor and the Legislature. The purpose of the meetings

17  shall be to gain consensus for priority requests and

18  recommended endowment funding levels for those priority

19  requests. An agency head may not designate a proxy for these

20  meetings.

21         (e)  Funds from the endowment may not be used to

22  supplant existing revenues.

23         (f)  When advised by the Revenue Estimating Conference

24  that a deficit will occur with respect to the appropriations

25  from the Tobacco Settlement Clearing Trust Fund in any fiscal

26  year, the Governor shall develop a plan of action to eliminate

27  the deficit. Before implementing the plan of action, the

28  Governor must comply with the provisions of s. 216.177(2). In

29  developing the plan of action, the Governor shall, to the

30  extent possible, preserve legislative policy and intent, and,

31  absent any specific directions to the contrary in the General

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  1  Appropriations Act, any reductions in appropriations from the

  2  Tobacco Settlement Clearing Trust Fund for a fiscal year shall

  3  be prorated among the purposes for which funds were

  4  appropriated from the Tobacco Settlement Clearing Trust Fund

  5  for that year.

  6         (6)(5)  ADMINISTRATION OF THE ENDOWMENT.--

  7         (a)  The board is authorized to invest and reinvest

  8  funds of the endowment in those securities listed in s.

  9  215.47, in accordance with the fiduciary standards set forth

10  in s. 215.47(9) and consistent with an investment plan

11  developed by the executive director and approved by the board.

12  Costs and fees of the board for investment services shall be

13  deducted from the earnings accruing to the endowment.

14         (b)  The endowment shall be managed as an annuity. The

15  investment objective shall be long-term preservation of the

16  real value of the principal and a specified regular annual

17  cash outflow for appropriation, as nonrecurring revenue. The

18  schedule of annual cash outflow shall be included within the

19  investment plan adopted pursuant to paragraph (a).

20         (c)  The board shall establish a separate account for

21  the funds of the endowment. The board shall design and operate

22  an investment portfolio that maximizes the financial return to

23  the endowment, consistent with the risks inherent in each

24  investment, and that is designed to preserve an appropriate

25  diversification of the portfolio.

26         (d)  No later than February 15, 2000, the board shall

27  report on the financial status of the endowment to the

28  Governor, the Speaker of the House of Representatives, the

29  President of the Senate, the chairs of the respective

30  appropriations and appropriate substantive committees of each

31  chamber, and the Revenue Estimating Conference. Thereafter,

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  1  the board shall make a status report to such persons no later

  2  than August 15 and February 15 of each year.

  3         (e)  Accountability for funds from the endowment which

  4  have been appropriated to a state agency and distributed by

  5  the board shall reside with the state agency. The board is not

  6  responsible for the proper expenditure or accountability of

  7  funds from the endowment after distribution to a state agency.

  8         (f)  The board may collect a fee for service from the

  9  endowment no greater than that charged to the Florida

10  Retirement System.

11         (7)(6)  AVAILABILITY OF FUNDS.--

12         (a)  Funds from the endowment shall not be available

13  for appropriation to a state agency until July 1, 2000.

14  Beginning July 1, 2000, the maximum annual amount of endowment

15  funds that may be appropriated shall be in accordance with the

16  following, based on earnings averaged over 3 years:

17         1.  Beginning July 1, 2000, no more than a level of

18  spending representing earnings at a rate of 3 percent.

19         2.  Beginning July 1, 2001, no more than a level of

20  spending representing earnings at a rate of 4 percent.

21         3.  Beginning July 1, 2002, no more than a level of

22  spending representing earnings at a rate of 5 percent.

23         4.  Beginning July 1, 2003, and thereafter, no more

24  than a level of spending representing earnings at a rate of 6

25  percent.

26         (b)  The Legislature may not appropriate more than 85

27  percent of the revenue that is received from participating

28  manufacturers or pursuant to s. 210.02 in any fiscal year and

29  made available for appropriation in the subsequent fiscal

30  year. Revenue received from participating manufacturers or

31  pursuant to s. 210.02 in any fiscal year which is not

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  1  appropriated by the Legislature shall be deposited into the

  2  Lawton Chiles Endowment Fund.

  3         (c)(b)  Notwithstanding the provisions of s. 216.301

  4  and pursuant to s. 216.351, all unencumbered balances of

  5  appropriations as of June 30 or undisbursed balances as of

  6  December 31 shall revert to the endowment's principal.

  7         (8)(7)  ENDOWMENT PRINCIPAL; APPROPRIATION OF

  8  EARNINGS.--The following amounts are appropriated from the

  9  Department of Banking and Finance Tobacco Settlement Clearing

10  Trust Fund to the Lawton Chiles Endowment Fund for Health and

11  Human Services:

12         (a)  For fiscal year 1999-2000, $1.1 billion;

13         (b)  For fiscal year 2000-2001, $200 million;

14         (c)  For fiscal year 2001-2002, $200 million; and

15         (d)  For fiscal year 2002-2003, $200 million; and.

16         (e)  For all subsequent fiscal years, a minimum of $25

17  million.

18         Section 2.  Section 210.02, Florida Statutes, is

19  amended to read:

20         210.02  Cigarette tax imposed; collection.--

21         (1)  An excise or privilege tax, in addition to all

22  other taxes of every kind imposed by law, is imposed upon the

23  sale, receipt, purchase, possession, consumption, handling,

24  distribution, and use of cigarettes in this state, in the

25  following amounts, except as hereinafter otherwise provided,

26  for cigarettes of standard dimensions:

27         (a)  Upon all cigarettes weighing not more than 3

28  pounds per thousand, 16.95 mills on each cigarette.

29         (b)  Upon all cigarettes weighing more than 3 pounds

30  per thousand and not more than 6 inches long, 33.9 mills on

31  each cigarette.

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  1         (c)  Upon all cigarettes weighing more than 3 pounds

  2  per thousand and more than 6 inches long, 67.8 mills on each

  3  cigarette.

  4         (2)  The description of cigarettes contained in

  5  paragraphs (a), (b), and (c) of subsection (1) are hereby

  6  declared to be standard as to dimensions for taxing purposes

  7  as provided in this law and should any cigarette be received,

  8  purchased, possessed, sold, offered for sale, given away, or

  9  used of a size other than of standard dimensions, the same

10  shall be taxed at the rate of 1.41 cents on each such

11  cigarette.

12         (3)  When cigarettes as described in paragraph (1)(a)

13  are packed in varying quantities of 20 cigarettes or less,

14  except manufacturer's free samples authorized under s.

15  210.04(9), the following rate shall govern:

16         (a)  Packages containing 10 cigarettes or less require

17  a 16.95-cent tax.

18         (b)  Packages containing more than 10 but not more than

19  20 cigarettes require a 33.9-cent tax.

20         (4)  When cigarettes as described in paragraph (1)(b)

21  are packed in varying quantities of 20 cigarettes or less,

22  except manufacturer's free samples authorized under s.

23  210.04(9), the following rates shall govern:

24         (a)  Packages containing 10 cigarettes or less require

25  a 33.9-cent tax.

26         (b)  Packages containing more than 10 but not more than

27  20 cigarettes require a 67.8-cent tax.

28         (5)  When cigarettes as described in paragraph (1)(c)

29  are packed in varying quantities of 20 cigarettes or less,

30  except manufacturer's free samples authorized under s.

31  210.04(9), the following rates shall govern:

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  1         (a)  Packages containing 10 cigarettes or less require

  2  a 67.8-cent tax.

  3         (b)  Packages containing more than 10 but not more than

  4  20 cigarettes require a 135.6-cent tax.

  5         (6)  For cigarettes not manufactured by a participating

  6  manufacturer as defined in s. 215.5601, beginning February 1,

  7  2001, an additional surtax shall be added to the amounts

  8  otherwise provided in this section. The division shall

  9  calculate the surtax on January 1 of each year, and the surtax

10  shall apply on February 1. The surtax per package shall be

11  calculated as the total annual payment due to the state

12  pursuant to the settlement agreement in the case of The State

13  of Florida et al., v. American Tobacco Company et al., divided

14  by the total number of packages of cigarettes delivered to

15  wholesale dealers for sale in this state by the four settling

16  manufacturers during the previous 12 months, rounded to the

17  nearest tenth of a cent.

18         (7)(6)  This tax shall be paid by the dealer to the

19  division for deposit and distribution as hereinafter provided

20  upon the first sale or transaction within the state, whether

21  or not such sale or transfer be to the ultimate purchaser or

22  consumer.  The seller or dealer shall collect the tax from the

23  purchaser or consumer, and the purchaser or consumer shall pay

24  the tax to the seller.  The seller or dealer shall be

25  responsible for the collection of the tax and the payment of

26  the same to the division. All taxes are due not later than the

27  10th day of the month following the calendar month in which

28  they were incurred, and thereafter shall bear interest at the

29  rate of 1 percent per month. If the amount of tax due for a

30  given period is assessed without allocating it to any

31  particular month, the interest shall begin with the date of

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  1  the assessment.  Whenever cigarettes are shipped from outside

  2  the state to anyone other than a distributing agent or

  3  wholesale dealer, the person receiving the cigarettes shall be

  4  responsible for the tax on said cigarettes and the payment of

  5  same to the division.

  6         (8)(7)  It is the legislative intent that the tax on

  7  cigarettes shall be uniform throughout the state.

  8         Section 3.  Section 210.20, Florida Statutes, is

  9  amended to read:

10         210.20  Employees and assistants; distribution of

11  funds.--

12         (1)  The division under the applicable rules of the

13  Department of Management Services shall have the power to

14  employ such employees and assistants and incur such other

15  expenses as may be necessary for the administration of this

16  part, within the limits of an appropriation for the operation

17  of the Department of Business and Professional Regulation as

18  may be authorized by the General Appropriations Act.

19         (2)  As collections are received by the division from

20  such cigarette taxes, it shall pay the same into a trust fund

21  in the State Treasury designated "Cigarette Tax Collection

22  Trust Fund" which shall be paid and distributed as follows:

23         (a)  The division shall from month to month certify to

24  the Comptroller the amount derived from the cigarette tax

25  imposed by s. 210.02(1)-(5) s. 210.02, less the service

26  charges provided for in s. 215.20 and less 0.9 percent of the

27  amount derived from the cigarette tax imposed by s. 210.02,

28  which shall be deposited into the Alcoholic Beverage and

29  Tobacco Trust Fund, specifying the amounts to be transferred

30  from the Cigarette Tax Collection Trust Fund and credited on

31  the basis of 5.8 percent of the net collections to the

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  1  Municipal Financial Assistance Trust Fund, 32.4 percent of the

  2  net collections to the Revenue Sharing Trust Fund for

  3  Municipalities, 2.9 percent of the net collections to the

  4  Revenue Sharing Trust Fund for Counties, and 29.3 percent of

  5  the net collections for the funding of indigent health care to

  6  the Public Medical Assistance Trust Fund.

  7         (b)  The division shall from month to month certify to

  8  the Comptroller the amount derived from the cigarette surtax

  9  imposed by s. 210.02(6), and that amount shall be transferred

10  from the Cigarette Tax Collection Trust Fund and credited to

11  the Department of Banking and Finance Tobacco Settlement

12  Clearing Trust Fund.

13         (c)(b)  The division shall from month to month certify

14  to the Comptroller the amount derived from the cigarette tax

15  imposed by s. 210.02 on all cigarettes sold at retail on any

16  property of the Inter-American Center Authority, created by

17  chapter 554, and such amount, less the service charge provided

18  for in s. 215.20, shall be paid to said Inter-American Center

19  Authority by warrant drawn by the Comptroller upon the State

20  Treasury, which amount is hereby appropriated monthly out of

21  such Cigarette Tax Collection Trust Fund.

22         (d)(c)  Beginning January 1, 1999, and continuing for

23  10 years thereafter, the division shall from month to month

24  certify to the Comptroller the amount derived from the

25  cigarette tax imposed by s. 210.02, less the service charges

26  provided for in s. 215.20 and less 0.9 percent of the amount

27  derived from the cigarette tax imposed by s. 210.02 which

28  shall be deposited into the Alcoholic Beverage and Tobacco

29  Trust Fund, specifying an amount equal to 2.59 percent of the

30  net collections, and that amount shall be paid to the Board of

31  Directors of the H. Lee Moffitt Cancer Center and Research

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  1  Institute, established under s. 240.512, by warrant drawn by

  2  the Comptroller upon the State Treasury. These funds are

  3  hereby appropriated monthly out of the Cigarette Tax

  4  Collection Trust Fund, to be used for the purpose of

  5  constructing, furnishing, and equipping a cancer research

  6  facility at the University of South Florida adjacent to the H.

  7  Lee Moffitt Cancer Center and Research Institute.  In fiscal

  8  years 1999-2000 and thereafter with the exception of fiscal

  9  year 2008-2009, the appropriation to the H. Lee Moffitt Moffit

10  Cancer Center and Research Institute authorized by this

11  paragraph shall not be less than the amount which would have

12  been paid to the H. Lee Moffitt Cancer Center and Research

13  Institute for fiscal year 1998-1999 had payments been made for

14  the entire fiscal year rather than for a 6-month period

15  thereof.

16         (3)  After all distributions hereinabove provided for

17  have been made, the balance of the revenue produced from the

18  tax imposed by this part shall be deposited in the General

19  Revenue Fund.

20         Section 4.  This act shall take effect upon becoming a

21  law.

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  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                             SB 1998

  3

  4  Eliminates Tobacco Settlement Financing Corporation, and
    attendant powers and duties established in the bill.
  5
    Defines "participating manufacturer" as: (1) one who entered
  6  one of the two settlement agreements already signed by the
    state and who complies with all provisions of the agreement
  7  including making payments to the state by December 31 of each
    year; and (2) one who enters into an agreement with the
  8  Attorney General which restricts outdoor advertising and
    transit advertising in the same manner as the original
  9  settlements and which provides for equivalent payments per
    pack of cigarettes delivered for sale in Florida.
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    Provides a statutory cap of 85 percent on annual
11  appropriations to be made of funds received from settling and
    participating tobacco companies. The unappropriated balance is
12  to be deposited in the Lawton Chiles Endowment Fund.

13  Amends the schedule of annual appropriations to the Lawton
    Chiles Endowment Fund by establishing a minimum level of $25
14  million for appropriations to the Endowment fund in all fiscal
    years subsequent to 2003-2004.
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    Creates an additional surtax on cigarettes beginning February
16  1, 2001, that will apply to cigarettes shipped to Florida
    other than those able to claim an exemption as a participating
17  manufacturer.

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