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Lawmakers swiftly delay hike in Florida unemployment compensation tax

TALLAHASSEE — Florida lawmakers gave sweeping approval Tuesday to a measure that delays a steep unemployment compensation tax increase for businesses.

The bailout will force Florida to borrow an additional $4.3 billion from the federal government to cover benefits for the state's growing number of unemployed workers.

It's a tradeoff the Republican-dominated Legislature is willing to accept, given dire predictions from the business community about how the unemployment tax increase would only lead to more pink slips.

"The business community has their tax bills on their desks right now," said Sen. Rudy Garcia, R-Hialeah, the Senate sponsor.

The bill unanimously passed the House and Senate, and Gov. Charlie Crist signed it into law just before his State of the State speech. It's the first of many initiatives lawmakers will consider this year to help boost the state's dismal economy.

"There is no better message to send to our fellow Floridians on the opening day," Crist said in a statement.

Democrats initially wanted to expand unemployment eligibility to tap an additional $440 million in federal dollars. But to avoid delaying the bill, they ceded their argument that the bill didn't address the larger problem.

"This is not going to fix the problem," acknowledged Rep. Ron Saunders, D-Key West. "This is going to delay the fix."

Republicans helped ease Democrats' concerns by including a provision to extend unemployment benefits for up to eight weeks, a move that will help about 20,000 workers.

A year ago, the unemployment compensation fund held $1.3 billion, but it was emptied by August as the state's jobless rate rose to the current 11.8 percent.

Since then, the state has borrowed about $250 million a month to pay benefits — a total now topping $1.2 billion.

Anticipating the deficit, Florida lawmakers passed legislation in 2009 to keep the fund solvent by increasing the unemployment taxes paid by Florida's 474,000 employers.

The rate charged to the majority of employers was expected to climb from $8.40 a worker to $100.30 a worker, a 12-fold increase.

But under the current bill, these businesses will face a $25.20 per-worker cost. The maximum rate will remain $378 per worker.

In borrowing the money, the state will owe approximately $658 million in interest. The first payment is due in September 2011, and lawmakers said businesses will pay increased assessments to cover the cost.

"The train is coming," Rep. Dave Murzin, R-Pensacola, said of the interest payment. "But this gives some predictability to the business cycle so business can plan to get hit by the train."

Sen. Ronda Storms, R-Valrico, put the numbers into context in talking about Jeff Miller, a tool supplier in Hillsborough.

"He's a man who is desperate to save his business. He's laid off everybody he could lay off, he turned off the air and heat and he said there was not another dime he could squeeze out," Storms said. "There is nothing more important (than this bill) to small-business men and women across the state who are barely hanging on."

Times/Herald staff writer Shannon Colavecchio contributed to this report. John Frank can be reached at [email protected] or (850) 224-7263.

Lawmakers swiftly delay hike in Florida unemployment compensation tax 03/02/10 [Last modified: Tuesday, March 2, 2010 9:32pm]
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