By GARY FINEOUT – Associated Press – A coalition of business groups, including the Florida Chamber of Commerce and the Florida Retail Federation, say the $817 million increase in unemployment taxes could harm the state’s economy when it starts in the spring.
Scott says he wants to make Florida more business friendly and lower the cost of doing business in the state, but he did not target the tax increase in the budget recommendations he presented last week.
Nearly 460,000 businesses across the state are getting notices about the higher unemployment taxes.
The minimum tax rate will jump from $72.10 per employee to more than $171.70 per worker. The maximum rate is also expected to rise from $378 to $459 per employee.
“This represents one of the most significant unemployment compensation tax increases in our history and comes at a time when our economy and employers can least afford it,” states the letter signed by eight groups, including Associated Industries of Florida and trade associations that represent builders, restaurant owners and small businesses.
Businesses pay unemployment taxes that are used for out-of-work benefits. But the problem is that the trust fund used to pay those benefits has been drained as nearly a million Florida residents have remained out of work. Florida’s unemployment rate is 10.3 percent.
Since 2009, the state has been forced to borrow $2.4 billion from the federal government to keep the trust fund solvent. The state – which manages the trust fund outside of the regular state budget – has paid part of the money back. But now it’s paying interest on the unpaid balance, which is passed on to employers through a once-a-year assessment.
State legislators initially voted to increase the taxes in order to replenish the fund, but delayed it in hopes the economy would recover. But now it’s unclear whether Scott and the Legislature will support another round of delays.
That’s because blocking part of the tax hike would stretch out the time that Florida has to pay back the federal government and subject employers to higher costs over a longer period of time.
House Speaker Dean Cannon’s spokeswoman Katie Betta said the speaker will “carefully consider” suggestions from the business community but added that any changes “should not require Florida to borrow more from the federal government.”
Business groups in their letter outlined two ways to decrease the size of next year’s increase.
One would change the amount of wages subject to the tax, while the other would lengthen the time the state would pay back the federal government. Neither proposal is expected to eliminate the increase, but business groups estimated it would lower the cost by about $100 per employee.
Chamber executive vice president David Hart said “the alternative is putting a pressure on employers that likely cause us to remain in a pretty challenging job environment.”
Scott spokeswoman Amy Graham said the governor was evaluating the proposal. But she pointed out that Scott and lawmakers already passed changes earlier this year, which included lowering the amount of weekly benefits provided to out-of-work residents. Scott has also proposed a “rebranding” of the unemployment system, including required training to help the unemployed gain job skills.
Florida employers pay the annual tax based on each business’ employment history over the past three years. Businesses with no layoffs – nearly half of the total – pay the minimum rate while those with the worst records pay the maximum. The rest pay somewhere in between.