TALLAHASSEE — A state organization that funnels millions of dollars in taxpayer money to private businesses has a high risk for corruption due to a lack of transparency, according to a new report from a good governance group.
Enterprise Florida, a public-private partnership tasked with engaging the private sector to create jobs, conducts much of its business using exemptions from Florida's open government Sunshine Law, concluded the Integrity Florida report released Wednesday.
Highlighting the importance of confidentiality in the competitive business arena, Enterprise Florida has lobbied for continued secrecy, and has already given out more than $1.5 million in incentives awards for companies that sit on its board.
Those board seats — many occupied by the state's largest companies — can be purchased for $50,000 a pop, said Dan Krassner, executive director of Integrity Florida.
"Enterprise Florida is most likely scaring off (out-of-state) capital and jobs by giving incentives to their board members," he said, adding that companies like Publix and Lockheed Martin have benefited from large incentive packages while sitting on the organization's 61-member board.
Enterprise Florida defended its incentives program as a proven way to create jobs and stated that there is nothing improper about a public-private partnership receiving corporate donations.
Enterprise Florida "requires private sector investment, just as other public-private partnerships in the state do the same," said Gray Swoope, president of the organization. "The model has worked." Swoope added that companies on the board do not get to decide who receives incentives and there "is no quid pro quo."
Enterprise Florida received $16 million for next year's budget, beginning July 1, and has doled out hundreds of millions of taxpayer dollars for business incentives since it was created in 1996.
Those incentives go to companies looking to relocate to or expand in Florida. Incentives come in the form of tax breaks, infrastructure money or cash grants that can run into the millions of dollars.
As the dollar-value of the incentives have rapidly grown over the last 15 years, lawmakers have begun asking for more details about how many jobs have actually been created as a result of taxpayer funds.
Gov. Rick Scott, who has been a strong supporter of taxpayer-funded business incentives, acknowledged Wednesday that accountability is key.
"We always have to remember that this is individual families' money," he said. "If we're going to provide money to companies to move to Florida and expand in Florida, think about where that money's coming from."
Last year, the Times/Herald reported on state data showing Florida has signed incentives contracts worth $1.7 billion since 1995, with businesses promising to create 225,000 jobs in return. In reality, the companies created only about a third of those jobs, and Florida paid out 43 percent of the contracted amount.
Enterprise Florida countered those numbers by claiming that the state's performance in the last three years has actually beat expectations.
"If you looked at the contracts that were reviewed in the last three years, the bottom line is that they were 49 percent higher in economic return to the state than what was projected," Swoope told board members in January. "We got more jobs, we got higher wages and we did it for less than what we expected."
After lawmakers called for more information, Enterprise Florida released a report in December touting the tens of thousands of jobs created as a result of its incentives program.
Krassner said those numbers are not clear, and that one of the companies that tracks Enterprise Florida's return on investment is also a recipient of Enterprise Florida's tax incentives. That calls into question its independence, Krassner said.
"Who does the calculations is also important," he said, pointing out that Ernst & Young is responsible for tracking state some incentives money and received an incentives package worth $96,000. "The taxpayers expect a certain degree of independence."
Swoope said Ernst & Young's role is completely separate from the incentive it received, and the well-respected company would not have taken the job if there was a conflict of interest.
Enterprise Florida is considering a number of reforms, including creating a website to list the incentives that have been paid out and potentially providing more information to the public about its meetings.
The report found the organization currently does not always announce its board meetings, does not always provide agendas and other information online and offers confidentiality to several companies receiving incentives, the report found. A report on business incentives, released this month by the Pew Center on the States, said Florida was "trailing behind" in the transparency category.
Scott, who is on the executive committee of Enterprise Florida, said transparency is key, but confidentiality is a crucial part of the business world.
"It's a trade off," he said. "We've got to make sure we can compete with these other states, but we've got to make sure people know how their dollars are spent."