Business

Florida Businesses Hammered by Jobless Loan

State owes $2 billion, plus interest, but repayment plans are sketchy
By: Kenric Ward | Posted: January 20, 2011 3:55 AM
Tampa

Harbor Island, Tampa Business District | Credit : Tony Alt - Shutterstock

Florida's politicians are staying mum, but interest on the state's $2 billion unemployment-insurance loans continues to mount.

The interest on the federal advances, which the state is using to fund jobless benefits, starts coming due in September. By then, the state will have racked up $61 million in interest charges.

While officials from Gov. Rick Scott on down remain noncommittal or silent on the subject of repayment, Florida's businesses are paying through the nose.

Unemployment taxes nearly tripled this year and the minimum unemployment tax will more than double again in 2012. That's an increase from $25 per employee to nearly $200.

Business groups, including the Florida Chamber of Commerce, hope that Tallahassee can ease that financial blow. But with the state facing a $3.6 billion budget deficit, there are no discretionary public dollars laying around.

And with Florida continuing to borrow $115 million a month to pay jobless claims, the state's tab is mounting daily.

Amy Baker, the state's chief economist and coordinator of the Office of Economic and Demographic Research, said the fiscal pinch gets tighter because federal regulation prohibits payment of the interest costs from the unemployment insurance tax collections.

The state's long-range financial outlook released last September included a plan to pay the projected interest from the general fund, but Baker dropped that idea in light of the rising deficit.

So the 2010 Legislature passed a bill imposing special assessments on employers to pay the interest due on the outstanding federal advances.

And businesses could feel yet another financial fillip. Beginning Jan. 1, 2012, assuming the state still has outstanding advances, Baker said employers will experience a partial loss of their federal unemployment-insurance tax credit.

The New York Times reported on Saturday: "If states are unable to repay their outstanding federal loans by November -- which will prove difficult for many -- nearly half the states could be forced to effectively raise federal taxes on employers by about $21 per worker, under a provision of federal law that automatically reduces the tax credits given to businesses in states that carry loans two years in a row."

As interest bills bear down, Florida could seek to at least further delay the charges. But the state's top elected leaders aren't talking about that yet, and if they talk, they're not committing.

Jenn Meale, a spokeswoman for Scott, told Sunshine State News that the governor "has not yet determined whether he will request an extension of the waiver."

Katie Betta, spokeswoman for House Speaker Dean Cannon, said, "We recognize that some businesses will experience an increase in the [unemployment compensation] tax this year. We are looking at various scenarios, but we also understand that any change to the tax structure will create higher taxes for many employers."

Senate President Mike Haridopolos' spokesman did not respond by deadline.

The office of Chief Financial Officer Jeff Atwater directed inquiries to the Department of Revenue, which then redirected questions to the Agency for Workforce Innovation, which then referred all questions to Baker.

With one of the highest jobless rates in the nation, Florida's unemployment ranks have topped 1 million for more than a year. That has strained the state's jobless fund, even though it pays a relatively modest maximum benefit of $275 a week.

To spread the rising costs, the Legislature substantially hiked the unemployment tax on businesses. Responding to employers' pleas for relief, lawmakers agreed to defer the increases last year. But the higher assessments are now kicking in, and businesses say the taxes are a painful double-whammy as they continue to struggle in a soft economy.

Calling the hikes a job killer, the Chamber is looking for another break.

“Hopefully, from our prospective, we can work with the Legislature to find a way to alleviate the impact of the tax increase and spread it out over time so businesses can continue to try and hire workers,” said Adam Babington, a Chamber executive.

Meantime, the House Economic Affairs Committee is reviewing ways to slow the borrowing. The committee reportedly is reviewing unemployment records to see if anyone is turning down jobs to stay on unemployment.

Betta confirmed that "we are looking at the eligibility requirements and program operation to determine if there are problems that need to be addressed legislatively."

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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.



Comments (11)

Derek
11:58PM JAN 24TH 2011
God help us all. Maybe we can elect some people that will make some real changes around here. The republicans are obviously not up to the challenge.
FTLCHAZ
10:00PM FEB 2ND 2011
Why doesn't the state just take all my profits and get it over with? I thought Gov. Scott was pro business?
AxTaxer
11:53PM JAN 24TH 2011
Where the hell is the fed when all this is going on? They are the ones telling all the states to extend unemployment. Now they're nowhere to be found.
Blake
11:43PM JAN 24TH 2011
Can anyone explain the logic behind giving someone money when their not working, but expecting them to go out and look for work? When will we get real, and understand that we can't let this class warfare go on.
Smithy
11:34PM JAN 24TH 2011
What are the rest of us supposed to do when the crap hit the fan? We've been out here looking for work and I haven't taken a dime from the government or anyone else for that matter. Studies have shown that after having their benefits cut, most people find work within 2 weeks!
Aaron
11:24PM JAN 24TH 2011
When the debt comes due, we'll see who the real conservatives are.
Sonny
10:52PM JAN 24TH 2011
What are all these good-for-nothings going to do when the nanny state goes broke? Load your shotguns, and stock-up on canned goods.
Sally
10:18PM JAN 24TH 2011
We really need some real tea party patriots in office to make the real hard choices when it comes to this stuff. Cause you know these tool-bag republican don't have the stones to really cut spending. Go Tea Party, Go Peg Dunmire!
John Casey
8:36PM JAN 23RD 2011
Damn, I thought we elected a republican government in Florida. Looks like taxes are going up anyway. Thanks for nothing RPOF. What is the difference anymore? Vote democrat, taxes go up, vote republican taxes go up. WTF!
Benny Ben
8:26PM JAN 23RD 2011
OF COURSE THE BUSINESS OWNERS ARE THE ONES WHO ARE GOING TO HAVE TO PAY FOR EVERYONE ELSE. After so long, people are not going to view business ownership as a profitable venture, and business-owners will just go away, and the jobs with them.
Dan
11:01PM JAN 20TH 2011
This is what happens when people get addicted to the public tit. The businesses are going to have to pay more for the shmucks not working or contributing at all.

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