Florida Has Till Fall to Pay Feds Interest on $2 Billion Loan
Around the State
As if Gov. Rick Scott and the Florida Legislature don't have a high enough fiscal mountain to climb, the federal government is about to bill them for interest on the $2 billion the state borrowed to pay unemployment benefits.
Florida isn't alone. This fall, some 30 states together will have to pay $1.3 billion in interest on more than $41 billion loaned to help them pay benefits to millions of their unemployed.
Gavin D. Tremain, a spokesman in the Congressional Budget Office in Washington, told Sunshine State News Saturday that some states have figured the interest payments into their budgets, some have not.
"I can't speculate a great deal on Florida's particular situation, especially on the weekend when our office is closed," Tremain said. "But the states are beginning to contact us, looking to lobby for extensions."
Tremain confirmed that the state debts are the highest they have been in the unemployment program's 75-year history -- which, he said, have nothing to do with the benefits Congress granted, then extended in December. Those were extended as part of the tax-cut deal and will be paid for with stimulus money.
The loans Florida and other states took out were just to pay for basic, 26-week unemployment benefits.
"Congress made the loans available," Tremain said, because a majority of members in both Houses "believed the economy would turn around quickly and most states would have them repaid" before the interest came due.
Tremain would not speculate on whether the new Republican majority in Congress, which has vowed to focus on deficit reduction, will entertain any postponement in collecting the interest.
In his campaign for governor, Scott promised to create jobs by lowering business taxes, reducing regulations and curbing lawsuits. Since taking office, he has stopped the imposition of new rules and created the Office of Fiscal Accountability and Regulation Reform to determine the impact of government on job creation.
According to a comprehensive national story in Saturday's New York Times, "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."
Florida's budget deficit now stands at $3.62 billion.
Spokespersons for the governor and Chief Financial Officer Jeff Atwater, at the Republican Party of Florida meeting in Orlando, were unavailable for interview.
Reach Nancy Smith at firstname.lastname@example.org or at (850) 727-0859.