February 4, 2010

By now, most Florida employers have reviewed their unemployment tax notices and are wondering where they will find the money to pay for these unexpected increases, sometimes up 1000% over last year’s amount, no later than April 30, 2010. AIF has responded to this alarm across the state and has worked diligently with our state’s legislative and executive leaders to develop a way to lower this tax burden at this critical time in our state’s economic condition.

Fortunately, those efforts are starting to pay off. Today, the House Economic Development and Community Affairs Policy Council unveiled legislation to immediately relieve most Florida employers from this exorbitantly increased tax bill this year.

Representative Jennifer Carroll (R-Jacksonville) explained the proposal which contains the following tax saving components:

• Reduces the amount of each employee’s wages upon which the employer pays the UC tax  – from $8,500 back down to $7,000 for 2010 and 2011.
• Establishes a quarterly payment plan for 2010 and 2011 that lets employers spread out their unemployment compensation payments over the whole year without normal application of penalties or interest. 
• Eliminates all elements of the rate calculations in current law that increase the tax for purposes of replenishing the Unemployment Compensation Trust Fund balance for 2010 and 2011.
• Allows unemployed Floridians to receive additional extended unemployment benefits funded by the federal government.

Representative Dave Murzin (R-Pensacola), the Council Chair, indicated at the meeting that he anticipated this legislation will be presented to the Council again next week for a vote.  He further cautioned the Council members that the Legislature must pass a bill to alleviate this enormous tax burden during the first week of the regular session, which opens on March 2, 2010. If they do not act timely, the current law will require the full amount of these taxes to be remitted to the state by April 30, 2010.  The bill provides a payment plan, which will significantly diminish the disproportionate cash flow impact this tax hoists upon Florida businesses.

Florida employers are classified by their history of unemployment claims. Under the House Council Proposal, those employers at the minimum rate can expect this year’s tax rate to drop to approximately $25.20 per employee – down from the current $100.30 under current law.  Those employers at the maximum rate would pay $379 per employee under this proposal – a decrease from $459 per person under current law.

Review the complete bill language here

View the Council staff analysis here

The vast majority of this increase is simply due to the skyrocketing unemployment rate that Florida has currently which is not expected to decrease before mid-2010.  Essentially, this means that the taxes are needed to pay benefits to those Floridians who are now jobless through no fault of their own. The tax is paid on the first payroll dollars that an individual earns in a calendar year. So, naturally the state receives most of these tax dollars in the first half of each calendar year. In 2009, Florida’s fund ran out of money in the summer, with no realistic hope of collecting additional dollars significant enough to cover that deficit prior to year end.

There is no simple solution to this problem.  The problem is absolutely tied to the economic recovery of this state.  Until jobs are added back to the economy, and more workers are earning incomes and payroll on which the taxes are remitted, the fund will not be replenished or restored.  This is a catch-22 situation for Florida’s employers.

AIF remains committed to responsible economic policy for Florida’s unemployment compensation system at tax levels that Florida employers can afford to pay while maintaining and expanding their businesses.  The high tax rates current law presents could lead many companies to reduce their workforce, which is contrary to the whole point of funding the unemployment system. 

AIF applauds Chairman Murzin, Representative Carroll and the House Council for distributing a plan that will immediately lower the tax burden for Florida employers this year as we weather this economic storm and grow our businesses into the future.

We further urge all AIF members to contact the members of the House Council this week and encourage them to vote favorably on this bill when it comes before them for a vote next Tuesday, February 9th, at 3:45 p.m. in Tallahassee.  Tell them to approve PCB EDCA 10-01 as soon as possible for the immediate relief Floridians need to keep business doors open and to get Floridians back to work.