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With hours left in session, $800 million in tax relief for Florida businesses passes

 
Published March 9, 2012

TALLAHASSEE — With less than 36 hours to go before the end of this year's legislative session, House and Senate lawmakers signed off Thursday on a massive last-minute $800 million package of tax relief for businesses.

The package — filed as an amendment to a non-controversial bill to rebrand the state's unemployment compensation program as "reemployment assistance"— marks a major win for a business lobby that wields significant sway in Tallahassee. It now awaits Gov. Rick Scott's signature.

The amendment would reduce the minimum unemployment compensation tax from $171 per employee to about $121 per employee, a cut that amounts to more than $800 million over three years. (Businesses will have to pay much of the money in the second half of the decade).

"This provides relief," said Rep. Carlos Lopez-Cantera, R-Miami. "This is what we came here to do. Times are tough and we're on the verge of a recovery."

But it's not clear how the plan will affect Florida's finances. In January, the state's chief economist, Amy Baker, warned that a similar plan would leave Florida vulnerable to another recession.

Since 2009, Florida has borrowed more than $2 billion from the federal government to help make payments on unemployment compensation claims. Florida had to pay more than $56 million in interest on the federal government loan last year, and the feds have been cracking down on the leveraged state by reducing credits.

With Florida's unemployment compensation trust fund still in the red, the amendment would slow down the rate at which the state repays the debt and builds up a sufficient surplus for the future.

Meanwhile, the state's unemployment tax debt to the federal government continues to balloon. The trust fund used to pay claims could be left underfunded, likely until 2018, according to state estimates. If another recession happens in the meantime, the state would probably have to go back to the feds, hat in hand.

"On average in the United States, we have a recession every five to six years," Baker warned lawmakers in January. "And the longest period we've ever gone between recessions is 10 years."

After Baker's presentation to lawmakers, a bill offering a business-backed unemployment tax relief program stalled in the House. On Thursday, the second-to-last day before the annual session ends, it was revived in the House in the form of an amendment.

Sen. Ellyn Bogdanoff, R-Fort Lauderdale, got the amendment onto the "reemployment assistance" bill (HB 7027), with the language backed by the business community. It would save companies about $550 million over the next 18 months, and $800 million over the next three years.

Chiefly backed by a coalition of powerful business groups, the amendment would require Florida to delay its plan to shore up its unemployment compensation finances by reducing the base wage subject to the tax, and increasing the debt repayment schedule.

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The business community has said that companies need further relief to stave off an $817 million unemployment compensation tax increase this year.

In 2010 and 2011, the Legislature gave business owners a multimillion-dollar break on unemployment compensation tax — slashing the number of weeks unemployed people can collect payments and cutting business contributions.

Bogdanoff, who was named Most Valuable Legislator by the Florida Chamber of Commerce last year, filed the amendment in the Senate on Feb. 27, right before her bill's last stop in the committee process. Most of the language in the original bill is not controversial and the multi-million tax reduction received no scrutiny during the committee meeting.

When the amendment landed on the House floor Thursday, some lawmakers cried foul, and attempted to block it on procedural grounds. Rep. Jim Waldman, R-Coconut Creek, said the last-minute amendment did not allow legislators to know how the program would affect the state's finances.

"There is a fiscal impact to the state of Florida," he said. "This may be the best bill that has ever come out of the House — but we don't know because it wasn't properly vetted."

The bill passed the House, 108-11, and heads next to Scott's desk, where it will likely join other business tax relief measures worth more than $150 million.

Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com