Florida Governor Vetoes Cat Fund Tax-Credit Plan

Florida Gov. Rick Scott has chastised state lawmakers for failing to fully consider a controversial plan to use state premium tax credits to help shore-up the state’s homeowners’ reinsurance fund before attaching it to the state budget.

Scott used his line-item veto power to eliminate the Florida Insurance Tax Pre-Payment Program that would have allowed insurers and financial institutions to purchase up to $1.5 billion in tax credits. The money would have gone to help to cover a potential $3.2 million shortfall in the Florida Hurricane Catastrophe Fund.

Sponsored by Senator J.D. Alexander (R-Lake Wales), primarily at the behest of Wells Fargo, the plan was tacked onto the state’s budget during last minute negotiations without consulting other lawmakers and state regulators.

However, the plan came under fire from Cat Fund officials, other lawmakers, and insurers on a variety of financial and administrative issues. Among the concerns expressed was that the plan would have marked the first time the fund ever borrowed money directly from the state, which could have implications on the state’s credit rating.

“While the stated purpose of this program is to provide an additional funding mechanism for the Florida Hurricane Catastrophe Fund, the language was not fully vetted through the committee process,” stated Scott in his veto message.

Cat Fund officials had vocally opposed the plan, which they said was passed without their input. For starters, they said there is no way to calculate just how much money would be raised by the program or its costs, making it impossible to determine how and where the money would be used.

Cat Fund Executive Director Jack Nicholson said the fund prefers its current structure that relies on bonds where the fund knows upfront how much money is raised and what the interest rates and administrative costs are.

“We prefer to go the pre-event bonding route,” said Nicholson. “It gives us certainty.”