Michael Peltier of the News Service of Florida reports that business owners who two years ago paid $8.40 per employee in unemployment taxes will see their bill go up to $172 starting Jan. 1 as the state continues to reel from a lingering recession, sluggish payroll growth and double digit unemployment.
Meeting Thursday to tweak estimates for the coming year and beyond, members of the revenue estimating conference were updated on a matrix of collections and payout data that call for rates to go up nearly $100 per employee from 2011 figures to a group of employers that pay the minimum fee.
If no changes are made, employers will see their bills go up based on two major factors. The figure used to calculate payments will increase from $7,000 to $8,500, an increase that will boost the maximum rate per employee from $378 to $459. For the approximately 220,000 employers who now pay at the minimum tax rate, the $1,500 threshold increase, coupled with a higher effective tax rate, will boost their 2012 tax bill from $72.10 per employees to $171.70.
Employers will also be required to pay an assessment for interest charges on nearly $2.4 billion in federal funds the state has borrowed to meet its obligations after it own reserves were depleted in August 2009. This year, employers paid $9.51 per employee to pay off nearly $56.1 million in interest on the federal loan.
“This system was never really designed to support unemployment at these levels for this period of time,” said David Hart, vice president of governmental affairs for the Florida Chamber of Commerce. “It’s a challenge not just here but across the country.”
Last year, lawmakers addressed the issue on multiple fronts, including reducing the number of weeks that unemployed workers could collect state benefits and making it easier for employers to drop workers from benefits for job-related behavior.
Lawmakers also required unemployment recipients to make more of an effort to find work. Combined with dropping the maximum duration of benefits from 26 weeks to 23 weeks, lawmakers hoped to save $4.7 million.
Going forward, Hart said he expects the business community to again target unemployment compensation to see if lawmakers can cushion the blow. One option would be to again postpone the threshold hike from $7,000 to $8,500 that is scheduled to kick in Jan. 1. The three-year increase has already been postponed once.
“The economy is still in a pretty soft state but we know that unemployment in Florida is moving in the right direction,” Hart said. “We just need some help until it has time to more fully recover.”
Other options include raising the cap on unemployment tax rates, a move that would force industries with the highest unemployment rates, such as construction, to pay in more. This year, the 52,000 employers in the highest loss categories put in $314 million in premiums but paid out more than $961 million in claims Such losses produced a rift between business groups that normally work together
Lawmakers, who made significant changes to the unemployment system last year, may be more reluctant to do so. But one business lobbyist remarked Thursday that the hue and cry from small business will likely increase after tax notices go out in December.