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Business-government Relations: Anything but Business?

Controversy surrounding the relationship between local government and small businesses has surfaced in the current legislative session. Florida Sen. Travis Hutson, R-Palm Coast, sponsored two bills last October that have now both passed a Senate committee as of Jan. 27, 2022.

Hutson’s two bills are SB 620, the Local Business Protection Act, and SB 280, the Transparency Act. Both bills have sparked debate as they are preemption bills that place state law ahead of local law. Both bills limit the authority of local governments and bolster the power of local businesses to protest local legislation through legal caveats. 

SB 280 requires local governments to enact a “business impact statement” as a preemptive measure to describe how an ordinance will affect local business. Local governments must assess whether proposed legislation would negatively impact a business’s profits or ability to operate without unnecessary interference. This bill also requires local governments to suspend enforcement of any ordinances that are challenged in a court of law. 

SB 620 provides local businesses with a legal pathway to sue local governments if they can prove that an ordinance was the direct cause of at least 15% profit loss in a business that has been in operation for at least three years. 

These two laws serve as legislation meant to push back against the 1973 Municipal Home Rules Power Act — a law that granted cities and counties the power to enact their own legislation with the exception of state law that overrides all local law. With the two new proposed bills, a balance between the role of local government and the protection of businesses will be made, Hutson said. 

Opponents of the bills, including the Florida Immigrant Coalition and the Florida League of Cities and Association of Counties, argue the bills give too much leverage to local businesses in the creation and stalling of legislation designed to promote the public good in their community. According to both organizations, the bills allow businesses to threaten governments with lawsuits paid for by taxpayers. 

Supporters of the bills, such as the Florida Chamber of Commerce, Associated Industries of Florida, the Florida Restaurant and Lodging Association, and Americans for Prosperity, believe the bills will create a promising environment for local business.

According to the bills’ supporters, removing the need for the state government to intervene in disputes between businesses and local governments would allow local businesses to take charge of their disputes directly. 

SB 620 is mirrored off of eminent domain law of business landowners’ cause for action against local government legislation and action that relates to damages made to the taking of property. The proposed bill would allow local businesses to claim damages based on profit margins instead of from damaged property. 

In an interview with Robert W. Emerson, a University of Florida business law Huber Hurst professor, Emerson expressed some concerns with SB 260’s practicality. 

Emerson described the bill as one that would limit local government control even though the bill would be difficult to enforce and even harder for businesses to “prove damages are from an ordinance, and not from competition from other businesses, new developments in society, or the markets,” Emerson said.  

Questioning the overall purpose of the bill, Emerson raised the issue of whether the bill would protect businesses from harmful legislation or if it was “simply a warning signal meant to intimidate one side to silence.” Emerson likened the bill to a SLAPP suit on face value for a government’s supposed damage to business profits.

“The statute does give a legal mechanism for contesting and possibly making citizens pay for what their elected local representatives chose to do – and thus dampen the desire for local laws without necessarily fighting in a democratic, public forum or elections rather than in courts,” Emerson said. 

The dynamic between government and business should be through elections and not through lawsuits, which is what this bill is proposing, Emerson said. Emerson added this bill would hinder the governing body at the local level and would overall be of detriment to communities.

Initially, SB 620 and SB 280 received substantial opposition due to the lack of provisions that would allow local governments to avoid a lawsuit. However, amendments have been added with the input of the Florida League of Cities and Association of Counties: the inclusion of provisions and exemptions for local governments to settle with businesses and reverse ordinances after substantial objections are raised within 180 days of pre-suit notice, relief from stays on legislation if the government wins in court and prevention of businesses from using SB 620 against state-mandated laws and ordinances. 

While SB 620 seems to be promoting compromise on the floor, the bill still raises concerns in regard to its overall effectiveness as a generalized bill to protect businesses from local government action throughout the state. 

“It is easy enough for a business to blame a local ordinance for profit losses, but it is another thing to prove it is the direct cause,” Emerson said.

The threat of a lawsuit might grab the attention of the public and the government, but if a case is brought to court, proving the crucial link between laws and profit margins may prove to be a difficult task. According to HistoricCity News, SB 620 can provide national companies with the ability to exploit the bill for their advantage against local ordinances.  

As of now, support for the bills SB 620 and SB 280 are slowly winning over the government associations of Florida as amendments continue to be added to restore the authority of local governments to pass legislation without fear of lawsuits. 

Many people remain concerned with how both bills may affect cities across the state — and Proposition 13 out of California serves as one example. California, a state where property tax makes up a majority of the state’s total revenue yearly, instituted a property tax ceiling of 1% in 1978. 

This generalized tax break over the whole state disproportionately benefited those with properties of increasing significant value. Before Proposition 13, property tax was based off of current market value, but afterward, it is determined by the purchase price regardless of how much time has passed or how much the market has increased. 

Before the implementation of Proposition 13, the average property tax rate was 2.67% and was managed by individual tax levies of local governments, generating a revenue of $40 billion for the state. After the passing of Proposition 13, the state’s property tax revenue dropped to below $20 billion. 

To this day, Proposition 13 continues to disproportionally affect local governments’ revenue and taxpayers tax breaks depending on their income bracket. As another example of a generalized local business bill, both of Hutson’s bills leave legislators and citizens with the question of whether or not Florida may face a similar overall detrimental fate if more changes aren’t made to preserve the structure, intention, and function of local municipalities to serve their constituents, including local businesses.

Check out other recent articles from Florida Political Review here.

Featured Image: Florida’s state Capitol building. Unmodified image by Wikimedia Commons used under a Creative Commons License (https://bit.ly/3vJyrlb).

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