This is Seeking Rents, a newsletter and podcast devoted to producing original journalism — and lifting up the journalism of others — that examines the many ways that businesses influence public policy across Florida, written by Jason Garcia. Seeking Rents is free to all. But please consider a voluntary paid subscription, if you can, to help support our work.
[00:00:00] Hello, welcome to Seeking Rents — The Podcast. I'm your host, Jason Garcia, the publisher of Seeking Rents, a newsletter where we investigate the ways businesses influence public policy in Florida. This is episode two.
On today's show, we'll be talking about a favor that Governor Ron DeSantis and the Florida Legislature did for one of Florida's biggest and most iconic companies —at the expense of that company's workers.
But first, a couple of announcements. If you haven't already, please sign up for the Seeking Rents newsletter, where we are producing some of Florida's best corporate accountability journalism. For example, Seeking Rents is the place that broke the story of how Ron DeSantis helped Disney get carved out from a law cracking down on tech companies.
Seeking Rents is free to all. But we've now enabled optional paid subscriptions, which you can buy, if you want to. It's a way to show your support for the work we do at Seeking Rents, and to help pay for public records requests too. [00:01:00] The DeSantis administration, for instance, often charges hundreds or thousands of dollars for what should be easy to fulfill requests for things like emails and text messages.
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Okay, before we dive into today's main segment, I want to take a moment to lift up a recent story by another reporter that I think deserves more attention. It broke a few weeks ago, but as you'll see in a second, it's still very [00:02:00] relevant. And it will be until October.
If you've got a pulse, you've probably noticed that gas prices have been really high lately. And you might remember that a few months ago, Florida Governor Ron DeSantis made a big deal about coming to the rescue on this.
In fact, just before Thanksgiving last year, the governor staged a pair of press conferences at gas stations in Daytona beach in Jacksonville, where he told everyone how Joe Biden was to blame for higher gas prices but Ron DeSantis was going to bring them down.
Specifically, the governor said he was going to tell the Florida Legislature to suspend the state gas tax. That tax adds about 27 cents a gallon to the price of gas in Florida. And DeSantis said he was going to tell the Legislature to suspend the gas tax for a long time. Up to six months. At one stop, the governor looked into the assembled TV cameras and said, quote, we'll basically zero it out for as long as we can.
Well, the Florida [00:03:00] Legislature ended up suspending the gas tax alright. But only for one month and not until October.
Remember, the Legislature was in session this year in January and February. So it could have cut the gas tax as soon as mid-March, if it really wanted to. But instead, the Legislature's Republican leadership decided to make Floridians wait for a break on gas prices for six months. This tax cut is still more than two months away.
Republicans in the Legislature claimed that waiting until October was their idea. They said they wanted to do it during a slow month for tourism, so they didn't end up saving a bunch of money for people from outside of Florida. This was all a bunch, of let's call it, baloney.
First of all, October is not an especially bad month for tourism. In fact, September is quite a bit worse. And second of all, it was not the Legislature's idea to delay this gas tax cut until October. It was Ron DeSantis' idea. [00:04:00]
Lawrence Mower, a reporter for the Tampa Bay Times is the guy who figured this out. He found emails that showed the governor's own staff proposed limiting the gas tax cut to one month and delaying it until October. What's more, the governor's staff proposed this literally nine days after DeSantis claimed to all those television cameras that he was going to push for a giant five- or six-month gas tax cut.
In other words, in public, Ron DeSantis was telling you he was pushing for as much gas tax relief as possible. In private, he was making sure you wouldn't save a dime until October.
Why would he do this? Why would the governor want to make you wait for six months before giving you a tax cut? Because that's when it will be most helpful to his reelection campaign.
This is entirely about political strategy and personal ambition. You see, Florida politicians do a lot of these kinds of temporary tax cuts. They call them tax holidays, and there's usually a few of them every year. [00:05:00] There's almost always one just before the school year starts for clothing and back to school supplies. And there's usually one just before the hurricane season starts for flashlights and batteries and other storm supplies. And every time the state holds one of these tax holidays, there's a big burst of free advertising and positive publicity in the form of stories on local TV news stations.
By delaying the start of this gas tax holiday until October, Ron DeSantis is betting that a whole bunch of favorable TV stories about him will hit the airwaves just as voters begin casting ballots in this year's governor's race. But he's also betting on your ignorance — and that you won't ever stop to think about why he made you wait this long for help in the first place.
Okay, so now let's turn to our main story of this week. It involves a favor that Ron DeSantis and the Florida Legislature did last year for one of Florida's biggest and best known companies: Publix.
This was some favor, too. It involved taking [00:06:00] rights away from thousands of Publix's employees. This favor has never been reported before. And it's a perfect illustration of something one of my journalism mentors taught me about the Florida Legislature when he was first showing me around the state capital 20 years ago: 90% of what goes on up there is a trade show.
Here's what that means: Florida lawmakers hold a two- month legislative session every year. And that session gets a lot of media attention while it's happening. But almost all the coverage focuses on a relatively small handful of issues: the big culture war battles of the day, plus a bit about the state budget and whatever pet issues the governor or House and Senate leaders choose to elevate themselves.
But the Legislature actually spends most of its time helping businesses: giving a tax break to one company over here, repealing a regulation for another company over there, and just generally refereeing disputes between industries. Yet only a tiny fraction of this stuff gets any attention at [00:07:00] all from reporters or even most lawmakers themselves.
Now, that's partly because these business issues are often really complicated. So complicated that no one takes the time to crack inside them, especially when there are so many other easier to understand issues to focus on instead. Of course, this is often just what corporate lobbyists are counting on when they try to slip something through.
The favor they did for Publix, which happened during the 2021 legislative session, was exactly this sort of issue. But let's unpack it now.
To do this, there are a couple of concepts we need to understand. The first is something in business law called 'appraisal rights.' They're also sometimes called dissenters rights, and they are a right that belongs to a shareholder in a company.
Let's say you decide to buy some stock in a company. But then that company decides to sell itself to another business at a price that you think is way below what the company is [00:08:00] actually worth. You are just a minor shareholder in the grand scheme of things. There's nothing you can do to stop this sale if bigger investors support it.
But you do have appraisal rates. What that means is you have the right to take the company to court and have an independent judge determine the fair value of your shares. And if that judge decides that your shares truly are worth more than the price the company negotiated when selling itself, then the company has to pay you the higher amount, plus interest.
This is an important protection for small investors, particularly for small investors in companies where there are a few big investors who control a majority of the shares and who have the ability to dictate major corporate decisions.
And it's a check against management self-dealing, or other conflicts of interest in mergers and acquisitions and other big company altering decisions that can devalue the holdings of smaller investors.
So those are appraisal rights. But then again, [00:09:00] not every shareholder has appraisal rights. A bunch of states have passed laws that take appraisal rights away from shareholders in publicly traded companies.
Now, the rationale behind this is that an unhappy shareholder in a public company like Apple or Disney or Twitter can easily unload their shares at any time. And they don't need a judge to figure out a fair market value for those shares because public stock markets do that themselves. Millions of shares are bought and sold every day by independent buyers and sellers on the public markets and a public company's stock price can change by the second.
This exemption for publicly traded companies is usually called a 'market-out exception.' And Florida is one of the states that has written a market-out exemption into its corporate law.
Which brings us to Publix. Publix Supermarkets is not a publicly traded company. You couldn't go buy stock in Publix tomorrow, even if you wanted to.[00:10:00]
But Publix does give and sell stock to its more than 200,000 employees and to its nine member board of directors. And if buys stock back from anyone who wants to cash it out. There are something like 680 million shares of Publix in circulation. But they trade on a completely closed market. Only current employees and directors can buy shares and those shares can only be sold back to the company.
And the price of each share is set by the company itself. Specifically, Publix's board of directors hires an outside vendor to decide the company's stock price, which it does ,according to Publix, by comparing Publix's financial results with those of similar publicly traded companies. The share price is adjusted every quarter. In other words, the price of Publix stock changes just four times a year.
Needless to say, this is not at all like the New York Stock Exchange or the NASDAQ.
And [00:11:00] yet, during the 2021 legislative session, the Florida Legislature passed a bill that took appraisal rights away from Publix shareholders — who, remember, are mostly current and former employees in their families.
Here's how they did it: remember that market-out exception, which restricts appraisal rights for shareholders in public companies? Well, the Legislature passed a bill that expanded that exception to also include certain private companies with stock that trades on a market that is, quote-unquote 'comparable' to the public stock markets. And the bill defined 'comparable' in a way that Publix, and only Publix, qualified for this new exemption.
Governor Ron DeSantis signed this bill into. So now Publix shareholders can no longer exercise appraisal rights if the company makes a big decision they disagree with.
The public lobbying for this legislation was led by a group of business law lawyers with the Florida Bar. They wrote a white paper explaining the bill in [00:12:00] detail that they provided to legislative staffers.
And in that paper, they acknowledged that this provision was written specifically for, quote, 'the unique circumstances of one large Florida private company.' And in questioning during a committee meeting, one of the Republican lawmakers sponsored the bill acknowledged that that 'one large Florida private company' was Publix.
Now, listen, I am swimming about as far from shore as I can here. I'm not an expert on corporate law, and even the little bit I've explained so far involved some oversimplifying and left a lot of nuance. Maybe this isn't a big deal in the grand scheme of things, and there wouldn't have been any Publix workers who would've invoked their appraisal rights, even if they still had them.
In fact, from reading the filings and listening to what little legislative discussion there was about this, it sounds like the Florida Legislature had already given Publix an exemption once before. But that exemption was accidentally removed a few years ago when the Legislature passed a totally different bill rewriting this [00:13:00] entire section of state.
But I also spoke to an attorney who has represented shareholders in appraisal rights cases. And he told me that this wasn't just some harmless bill. That's because while the Legislature may have tried to limit this exemption to Publix alone, it's only a matter of time until other private companies find a way to contort themselves into qualifying for it as well. Which means more shareholders will lose their rights, too. This attorney predicted that it would actually become very easy for other private companies to exploit this.
And regardless of whether you think that this is ultimately a benign change or not, it's also an example of one of the things that big campaign contributions and teams of lobbyists buy you in Tallahassee.
Ask yourself how responsive you think that Ron DeSantis and legislative leaders would be to a problem you brought to them.
Or better yet, let's remember what DeSantis and the Legislature did to help the millions of Floridians who, during the COVID 19 pandemic, had to endure a [00:14:00] designed-to-fail website and months long bureaucratic delays, just to get their share of some of the worst in the nation unemployment benefits. Those people had problems, too. Big ones.
And what did Florida's Republican governor and Republican-controlled Legislature do? They refused to improve benefits or remove barriers to obtaining them. All they did was promise to improve that website. And they haven't even done that yet.
But then again, laid-off workers struggling to pay the rent or mortgage don't spend more than $1 million a year on campaign contributions like Publix. So when Publix has a problem, well, that's when the Florida Legislature pays attention.
All right. That's our show for the week. Before we go, though, I feel like I have to address a raging personal controversy. It's come to my attention that some people are unhappy with my use of the term 'pod' as shorthand for podcast, which is admittedly something I did last. In my defense, I thought [00:15:00] this was a thing people say? But maybe it's not.
Or maybe my friends are just old.
Anyway, if you've got any ideas, you'd like to see us cover on a future episode of the pod, or in a future story in the Seeking Rents newsletter, I'd love to hear from you. My email address is in the show notes and my Twitter DMS are always open at @Jason_Garcia.
Quick shoutout again to Lawrence Mower of the Tampa Bay Times for digging into the truth about why Floridians are waiting six months for a gas tax cut. We'll have a link to his story in the show notes. Read it.
And also a shoutout to all the other real journalists out there, still digging for truth, explaining complicated subjects, and challenging powerful people and institutions.
Subscribe to a newspaper. Donate to a public radio station. Support local news.
Thanks again for listening, everybody. See you soon.
I'm curious what specifically was "in a way that Publix, and only Publix, qualified for this new exemption." -- since I have to assume the company name is not explicitly invoked. I had no idea about these appraisal rights existance for either private or public companies. The more you know, eh?