Leaders look for unemployment tax fix
TALLAHASSEE — Business groups clamoring to block a big increase in the state’s unemployment compensation tax got a boost Thursday from Gov. Charlie Crist and legislative leaders.
Without offering a plan, Crist, House Speaker Larry Cretul and Senate President Jeff Atwater issued statements vowing that they will work to ease what could be a twelve-fold tax increase for some employers struggling in the state’s fragile economy.
“Even though the bills are due in April, we are prepared now to delay this increase in order to ensure that our Florida businesses and employees get relief at a time they need it most,” Crist said. “I call on the Legislature to act quickly on this issue for the people of Florida.”
Atwater, R-North Palm Beach, a Republican candidate for the state Cabinet post of Chief Financial Officer, joined the chorus, saying “we are committed to providing Floridians relief today and a plan for tomorrow.”
Added Cretul: “Our goal is to pass legislation early in the upcoming session that will stabilize the costs of unemployment and help businesses to plan for the financial demands the jobless claims are placing upon them.”
The minimum annual rate charged by the state to employers with a strong record of keeping employees will rise from $8.40 per worker to $100.30. The maximum rate, now $378 per employee, will jump to $459 – with a steadily increasing number of Florida businesses expected to fall into this sector because more have been laying-off workers.
Although tax payments are due this spring notices to employers went out beginning in December, fostering a groundswell of opposition. The tax increase is automatic under state law, triggered when the balance of the state’s unemployment compensation trust fund dropped below 4 percent of taxable payroll last June.
The trust fund had a $1.3 billion surplus last December that melted away as Florida’s jobless rate climbed. The tax impact on businesses expanded when the same groups now calling for repeal of the tax hike supported increasing taxable wages from $7,000 to $8,500 per employee to help replenish the trust fund more quickly.
The Florida Retail Federation, National Federation of Independent Business, and Florida Chamber of Commerce have been warning the tax hike could force companies to lay-off even more workers.
Florida’s 11.5 percent unemployment rate – its highest in 36 years – has forced the state to borrow $839.5 million since August, when the unemployment trust fund fell into the red. The Florida Legislature will have to begin repaying the loans, with hundreds of millions of dollars in interest alone, beginning next year.
Democratic Rep. Ron Saunders of Key West said House Democrats are willing to take the lead on working with the Obama administration to get an additional year’s grace on loan repayments or forgive the debt outright.
“It’s not clear what we’re going to come up with,” said Barney Bishop, Associated Industries of Florida president. “But I think we’re going to have something, maybe a delay in collecting the tax, or a payment plan that would make it easier on businesses.”
Florida is not alone in struggling to maintain an unemployment compensation fund. Twenty-six states and the Virgin Islands have borrowed $24.2 billion from the federal government — much of it over the past year — as unemployment rolls climbed, according to the National Conference of State Legislatures.