House Bill 0419c1

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    Florida House of Representatives - 2000              CS/HB 419

        By the Committee on Agriculture and Representatives
    Stansel, Casey, Harrington, Peaden, Bainter, Spratt and
    Patterson




  1                      A bill to be entitled

  2         An act relating to tobacco production relief;

  3         providing legislative intent; providing for use

  4         of state funds to assist persons and

  5         communities adversely affected by the tobacco

  6         settlement; providing for periodic

  7         appropriation and distribution of such funds;

  8         specifying uses and recipients of distributed

  9         funds; providing for administrative and other

10         incurred trust fund costs; providing for

11         appointment of trustees to administer the

12         distribution of such funds and specifying their

13         duties; authorizing reimbursement for per diem

14         and travel; providing for public meetings and

15         records; providing for assistance from other

16         agencies; requiring an annual report on trust

17         fund activities; creating s. 196.33, F.S.;

18         exempting tobacco barns and tobacco-farming

19         equipment from the tangible personal property

20         tax for a specified period; providing for

21         reimbursement to affected counties for loss of

22         such revenue; providing a contingent effective

23         date.

24

25         WHEREAS, tobacco was one of the first export

26  commodities in this country, becoming established as a staple

27  crop as early as 1703 when over 23 million pounds were

28  exported, and was the major export commodity to raise funds to

29  finance the American Revolution, and

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  1         WHEREAS, from its beginnings the production of tobacco

  2  was, and continues to be, a legal enterprise in this state and

  3  nation, and

  4         WHEREAS, tobacco has been produced by growers in this

  5  state every year since a federally controlled quota system was

  6  established in 1938, and

  7         WHEREAS, tobacco has been one of the most stable and

  8  predictable crops for Florida farmers to produce due to the

  9  federal quota system, which regulates the volume of

10  production, and the producer-owned-and-operated Flue-Cured

11  Stabilization Corporation, which provides market stability at

12  no net cost to any taxpayer or governmental entity, and

13         WHEREAS, the production of tobacco, as compared to

14  other agricultural commodities, requires a proportionally

15  larger investment of capital per unit of production due to the

16  purchase and possession of quota and the infrastructure needed

17  for production, which requires sufficient agricultural land

18  and specialized barns and production equipment, and

19         WHEREAS, the necessarily large production costs of

20  tobacco causes tobacco producers to have very large asset

21  investments and debt service requirements, which constitute a

22  disproportionally large component of the local economies of

23  tobacco-growing counties in this state, and

24         WHEREAS, in 1994 the Legislature passed, and the

25  Governor subsequently signed into law, Committee Substitute

26  for Committee Substitute for Senate Bill 2110, which became

27  chapter 94-251, Laws of Florida, and which amended the

28  Medicaid Third-Party Liability Act to effectively remove

29  defenses in tortious litigation by the state against tobacco

30  companies, and

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    Florida House of Representatives - 2000              CS/HB 419

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  1         WHEREAS, the state and the tobacco companies reached a

  2  settlement on August 25, 1997, in The State of Florida et al.

  3  v. American Tobacco Company et al., with the tobacco companies

  4  agreeing to pay the state $11.3 billion over 25 years, and

  5         WHEREAS, based on the "Most Favored Nation Status"

  6  section of the settlement, the state has increased its

  7  settlement amount to $13 billion, an increase of $1.7 billion,

  8  and

  9         WHEREAS, as a direct result of this litigation and

10  other governmental actions, in the 1998, 1999, and 2000

11  production years a total quota reduction of 18 percent, 17

12  percent, and 18.5 percent, respectively, occurred, leaving

13  many tobacco producers in serious financial peril from such a

14  substantial loss of production, and additional reduction is

15  anticipated in the 2001 production year, and

16         WHEREAS, while the tobacco quota holders in this state

17  still possess sufficient infrastructure and equipment to

18  produce the quota volume allocated in 1997, the loss of quota

19  since then has severely affected the value of their

20  investment, and

21         WHEREAS, other tobacco-producing states have either

22  passed or are currently considering legislation to assist

23  their tobacco quota holders with costs such as asset loss,

24  stranded investment, and income and employment opportunities,

25  and

26         WHEREAS, since the settlement agreement in The State of

27  Florida et al. v. American Tobacco Company et al., the state

28  has neglected to consider any method of assistance for tobacco

29  quota holders, and such assistance is warranted because the

30  decline in both consumption and the farmgate price of tobacco

31  is a direct result of the state's tobacco litigation, and

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  1         WHEREAS, the assistance to tobacco quota holders

  2  provided by this act will help to ensure the stability of the

  3  economies of 20 Florida counties by assisting the family farms

  4  in this state that have been adversely impacted by Florida's

  5  participation in the tobacco litigation, and

  6         WHEREAS, this will entail efforts to transition,

  7  diversify, and retool farms that have for generations produced

  8  and depended on tobacco as their primary source of income, and

  9         WHEREAS, there are precedents to the types of actions

10  taken by this act, NOW, THEREFORE,

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

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14         Section 1.  It is the intent of the Legislature that

15  Florida's tobacco quota holders, warehouse operators, and

16  their respective workforces and communities be given

17  assistance due to the adverse economic effects of the loss of

18  tobacco quota occurring since the tobacco settlement

19  agreements, beginning in 1997. Such assistance is intended to

20  be provided for losses incurred by persons involved in tobacco

21  production because of actions brought against tobacco

22  companies by the state, beginning in 1995 with the amendment

23  of the Medicaid Third-Party Liability Act, so that the persons

24  incurring such losses may begin the process of seeking out,

25  experimenting with, and developing diverse profitable

26  enterprises and may continue to retain ownership of their land

27  and thereby ensure that farms remain productive agricultural

28  entities and provide ancillary environmental benefits. Such

29  assistance is also intended to help recipients reduce their

30  encumbered debt on stranded investment in specialized

31  equipment and assist them in maintaining adequate cash flow in

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  1  line with that projected for tobacco production before the

  2  litigation and subsequent settlements of 1997 and 1998. It is

  3  also intended to offer opportunities to quota holders and

  4  other qualified recipients who may desire additional training

  5  as a means of helping employees and communities make the

  6  transition to alternative crops or other economic development

  7  opportunities. It is also the intent of this act to provide

  8  economic development assistance for the 20 tobacco-producing

  9  counties affected by the state's tobacco litigation.

10         Section 2.  (1)  Funds appropriated to fulfill the

11  requirements of this act shall be deposited into the Florida

12  Indemnification and Community Revitalization Trust Fund. The

13  Trustees of the Florida Indemnification and Community

14  Revitalization Trust Fund shall distribute all funds deposited

15  into the trust fund as provided in this section.

16         (2)  The Trustees of the Florida Indemnification and

17  Community Revitalization Trust Fund shall distribute each

18  annual appropriation, other than those appropriated for

19  purposes of subsection (3), as follows:

20         (a)  An amount of $500,000 per year for 10 years to the

21  Institute of Food and Agricultural Sciences of the University

22  of Florida to provide on-farm direct assistance to growers in

23  the tobacco-producing counties affected by the state's tobacco

24  litigation as specified in section 1.

25         (b)  An amount of $1 million per year for 10 years to

26  the North Central Florida Regional Planning Council, with

27  proviso that funds be used in the tobacco-producing counties

28  affected by the state's tobacco litigation as specified in

29  section 1. These funds are to be used to develop alternative

30  industries, employment opportunities, and other economic

31  development initiatives in the designated counties. Over the

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  1  course of the program, not less than 50 percent of such

  2  assistance must be used to enhance area agricultural

  3  opportunities and any other agricultural ventures deemed

  4  appropriate by the trustees, and the remaining funds may be

  5  used for general economic development projects to enhance jobs

  6  and the local tax base through the North Central Florida

  7  Regional Planning Council or other appropriate economic

  8  development agencies.

  9

10  Funds appropriated for distribution under this subsection

11  shall be distributed in equal amounts on March 1 each calendar

12  year for 10 years, beginning in 2001, for the purposes of and

13  in accordance with the requirements set forth in this

14  subsection.

15         (3)  The Trustees of the Florida Indemnification and

16  Community Revitalization Trust Fund shall also distribute the

17  following appropriations:

18         (a)  An appropriation of $50,000 to the Department of

19  Agriculture and Consumer Services to determine the feasibility

20  of marketing stranded tobacco equipment to other

21  tobacco-producing countries. The Department of Agriculture and

22  Consumer Services shall make special efforts to expand markets

23  and develop new marketing opportunities for tobacco producers

24  making the transition to other products or ventures.

25         (b)  An appropriation of $150,000 per year for 3 years

26  to the North Central Florida Regional Planning Council to

27  assist tobacco warehouse marketing firms in their transition

28  from traditional tobacco marketing to alternative ventures.

29         (c)  An appropriation of $25 million to the Department

30  of Agriculture and Consumer Services to be used as refinancing

31  loans to tobacco farmers and quota holders. The department

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  1  shall, pursuant to chapter 120, Florida Statutes, adopt rules

  2  and procedures for implementing the loan program under this

  3  paragraph.

  4         (4)  It is the intent of the Legislature to hold

  5  harmless Florida's share of the Phase II National Tobacco

  6  Growers Settlement through the remaining 11-year schedule

  7  adopted at the time of the signing of the agreement.

  8         (5)  Administrative and other costs incurred by the

  9  trust fund shall be paid and deducted from funds available for

10  distribution under this section.

11         Section 3.  (1)  The Trustees of the Florida

12  Indemnification and Community Revitalization Trust Fund shall

13  be the Florida Trustees for the Phase II National Settlement

14  Fund and four additional individuals appointed as follows: one

15  by the President of the Senate, one by the Speaker of the

16  House of Representatives, one by the Commissioner of

17  Agriculture, and one by the Executive Director of the North

18  Central Florida Regional Planning Council.

19         (2)(a)  The trustees shall meet and organize within 60

20  days after the effective date of this act. The trustees shall

21  adopt rules pursuant to chapter 120, Florida Statutes, to

22  provide for certification of eligible participants and

23  recipients under this act. All distributions of funds under

24  this act must be authorized by the trustees, and only

25  recipients certified by the trustees as eligible for

26  compensation under this act may receive compensation.

27         (b)  All meetings of the trustees shall be public

28  meetings within the meaning of chapter 286, Florida Statutes,

29  and all records made or received by the trustees in connection

30  with their duties under this act shall be public records

31  within the meaning of chapter 119, Florida Statutes.

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  1         (c)  The trustees shall serve without compensation but

  2  shall be entitled to reimbursement for per diem and travel

  3  expenses incurred in the performance of their official duties,

  4  in accordance with s. 112.061, Florida Statutes.

  5         (3)  State agencies shall provide the trustees with any

  6  information necessary to fulfill their duties under this act.

  7  Enterprise Florida, Inc., the Office of Tourism, Trade, and

  8  Economic Development, and other economic-development-related

  9  state agencies shall maximize existing program assistance

10  opportunities for the affected area, including workforce

11  development, retraining, and business recruitment efforts. The

12  trustees may also request the assistance of the Farm Service

13  Agency of the United States Department of Agriculture.

14  Trustees shall ensure that the funds appropriated by the

15  Legislature for distribution under this act are used in

16  accordance with the intent and purposes established by this

17  act. The trustees shall prepare and submit an annual report to

18  the Auditor General, the Office of Program Policy Analysis and

19  Government Accountability, the Commissioner of Agriculture,

20  the President of the Senate, and the Speaker of the House of

21  Representatives, detailing activities of the Florida

22  Indemnification and Community Revitalization Trust Fund for

23  the most recently completed fiscal year. All costs for

24  assistance by the Farm Service Agency or outside sources shall

25  be considered administrative costs under this act.

26         Section 4.  Section 196.33, Florida Statutes, is

27  created to read:

28         196.33  Tobacco barns and equipment.--Tobacco barns and

29  tobacco-farming equipment shall be exempt from the tangible

30  personal property tax through fiscal year 2010. Counties

31  affected shall be reimbursed annually upon application to the

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  1  Department of Revenue from the Florida Indemnification and

  2  Community Revitalization Trust Fund for any loss of revenue as

  3  a result of this exemption.

  4         Section 5.  This act shall take effect July 1, 2000, if

  5  HB 421 or similar legislation creating the Florida

  6  Indemnification and Community Revitalization Trust Fund is

  7  adopted in the same legislative session or an extension

  8  thereof and becomes law.

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