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IG Report: Enterprise Florida’s corporate welfare process a mess

Governor Rick Scott today released the Florida Chief Inspector General’s report on Digital Domain. Digital Domain received $20 million in taxpayer funding to “create jobs” in the state. According to the Executive Summary:

The process designed to award economic development incentive funding under the Quick Action Closing Fund (QACF) statute did not result in a recommendation by Enterprise Florida, Inc. (EFI) to the Office of Tourism, Trade, and Economic Development (OTTED). Concurrent to that statutory process, Digital Domain sought alternative means to obtain funding. In 2009, the funds for QACF that were unexpended in Fiscal Year (FY) 2008-2009, were reverted by the Legislature, appropriated within the same fiscal year to OTTIED and were awarded to recipients including Digital Domain, without the requirement to follow the statutory process for awarding QACF awards.

Although a statutorily prescribed process in place for determining Digital Domain’s eligibility for a QACF award did not result in a recommendation to fund Digital Domain an award of $20 million to Digital Domain still occurred. [My emphasis]

“There needs to be more oversight and accountability of the public’s money,” said Dan Krassner, executive director of the independent government watchdog group Integrity Florida.

Krassner states, “The report makes it clear that Enterprise Florida offered Digital Domain more than $6 million from the closing fund. Unfortunately, Enterprise Florida still appears to be utilizing an insufficient vetting process. Enterprise Florida made several incentive deals with companies just in the last year that have gone bankrupt, including one headed by a convicted cocaine trafficker.”

Companies should not be allowed to circumvent the process but they continue to do so.

“Gov. Scott guaranteed 1,000 new jobs from Northrop Grumman in his State of the State speech. After the speech, Enterprise Florida sat down with the company to negotiate how much money the company wants. How could taxpayers possibly get a good deal with that flawed process? Integrity Florida is encouraged to see bipartisan efforts by lawmakers to increase accountability and transparency of incentive deals,” notes Krassner.

The IG report states, “Testimony supported that although improvements have been made to statutes and processes since 2009, an award similar to the one to Digital Domain could happen again today if the Legislature appropriates funds and gives the Executive Branch the discretion to expend those funds.”  [My emphasis]

The Chief Inspector General made the following recommendations:

Therefore, We recommend that the DEO conduct a formal evaluation of the current statutory provisions to ensure the incentive authority, waiver authority and time frames for evaluation and decision making adequately protect the state’s interests and determine if recommendations for enhancements should be made to the Legislature.

We also recommend that DEO and EFI conduct a review of the economic development incentive processes so that recommendations for improvement may be considered such as documentation and codification of the complete decision making process.

Finally we recommend that DEO and EFI define and codify the process to be followed when DEO’s Division of Strategic Business Development and EFI staff disagree on whether to fund a project. At a minimum, this process should include full disclosure in writing to ensure transparency of the rationale for the ñnal decision.

Governor Scott issued the following statement:

“This Inspector General report shows two things – first, our current economic project vetting process is in place for a reason, and second, that process was clearly circumvented by the previous administration for the Digital Domain deal. We must ensure Florida has the tools needed to compete for economic investment, but we must also ensure that competitive process includes protocols to safeguard taxpayer dollars by focusing on a return on investment.”