State Politics

State lawmakers struggling with unemployment tax issue

TALLAHASSEE -- Florida lawmakers began struggling with another huge, automatic unemployment compensation tax hike Wednesday, nine months after reducing most of an even bigger one.

Business leaders are seeking another rollback, but Senate Commerce and Tourism Committee Chairwoman Nancy Detert noted lawmakers already “delayed the inevitable” once.

“It’s probably bite-the-bullet time,” said the Venice Republican. “We’re willing to make changes, I would presume lots of creative ideas, but we’re also going to call for some political courage this year.”

About 460,000 Florida employers pay the annual tax that’s based on each’s employment history over the past three years. Businesses with no layoffs -- nearly half of the total -- pay the minimum rate for every employee making at least $7,000 while those with the worst records pay the maximum that’s capped by law at $378. The rest pay rates somewhere between those two extremes.

A year ago, the minimum tax rate for 2010 was set to increase nearly 1,100 percent from $8.40 to $100.30 per qualifying employee due to Florida’s high unemployment rate. It topped out at 12.3 percent in March but has shown only slight improvement since then. The October rate was 11.9 percent.

Lawmakers cut the this year’s minimum rate to $25.20 in a bill passed and signed into law by Gov. Charlie Crist on the first day of the annual legislative session in March.

The rollback, though, meant the state had to increase its borrowing from the federal government. Florida now has borrowed $1.8 billion since its unemployment compensation trust fund hit zero last year.

The minimum rate is set to increase again to $72.10 next year. Employers also will face a special assessment of $9.51 per employee to cover a $61 million interest payment on the federal loan.

Florida Retail Federation executive vice president Randy Miller, a former state Revenue Department director, said a tax increase had been expected but not of that magnitude. He said the forecast was for a $44 minimum rate.

“We’ve got to do something,” Miller told the Senate panel on behalf of a coalition of business groups.

Miller offered several suggestions but said the coalition isn’t wedded to any of them yet.

One is to avoid the special assessment by having the state tap general tax dollars to make the interest payment. The state treasury eventually would be repaid with unemployment tax dollars when times get better.

“We’re not asking for you to give us that money,” Miller said. “We’re saying pay it and get that interest off of us, that special assessment. That’s a killer.”

He also noted Texas has saved interest costs by selling bonds at a lower rate than the 4.5 percent the federal government is charging.

Another idea is to raise the cap so the employers most responsible for layoffs pay a bigger share. Their costs now are being subsidized by businesses with few or no layoffs.

Detert, though, noted that would increase the tax for employers hardest hit by the recession such as the construction industry.

“We could tip them over the edge, off the cliff,” Detert said.

Revenue Department Director Lisa Vickers agreed, saying the state cannot tax employers no longer in business.

Miller said another to require jobless workers to get retrained or undergo a skills assessment before they can collect benefits.

“Let’s get them having to do something to get that money,” Miller said.

Detert asked staffers to gather information on what other states are doing, particularly those nearby that compete with Florida for new businesses.