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Florida Businesses Hammered by Jobless Loan

January 18, 2011 - 6:00pm

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."


Contact Kenric Ward at or at (772) 801-5341.

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