Florida Expects to Repay Federal Unemployment Loans by May
By Jim Stratton, Orlando Sentinel
Florida’s unemployment trust fund, drained when the state’s labor market collapsed, should be back in the black by the middle of 2013, according to state officials.
The state’s outstanding loan balance to the federal government was about $544 million at the end of November, and economic analysts project Florida will pay that off and no longer have a need to borrow by May.
The falling costs of the system, which provides unemployment payments of up to $275 a week to laid-off workers, coincide with a decline in the tax paid by employers into the unemployment trust fund. The Florida Chamber of Commerce says beginning next year, the minimum tax rate that businesses pay will fall from about $121 per employee to $82 per employee.
Scott Merritt, executive officer of the Home Builders Association of Metro Orlando, couldn’t quantify exactly what that will mean for his members, but he said that in the current economy, “any reduced tax or fee” is good news.
Florida has been borrowing money from Washington since August 2009 to make payments to laid-off workers eligible for unemployment benefits — or “Re-employment Assistance” as it’s now called by state officials.
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In times of relatively low unemployment, the trust fund remains solvent, supported by the taxes imposed on businesses. Companies are charged, in part, based on how often their employees file jobless claims. But Florida, like many other states, drained its trust fund as businesses shed tens of thousands of workers during the depths of the recession.
Washington supplied the money to keep benefits flowing and waived interest rates until the end of 2010. States unable to pay their federal loans off quickly — usually in two to three years — were hit with a penalty.
Florida has borrowed about $3.3 billion to make payments, according to state officials. It has paid about $99.4 million in interest.
A spokesman for the Florida Department of Economic Opportunity said the central reason unemployment costs have fallen is because the state’s labor market is improving.
The number of people on continued claims — those receiving payments during some extended period of time — has fallen from about 553,000 in December 2010 to about 281,000 today. The state’s unemployment rate has fallen to 8.5 percent, a four-year low.
“The most obvious [reason] is simply that more Floridians are finding employment,” said James Miller, “and therefore leaving the Re-employment Assistance rolls.”
The state, however, also has squeezed unemployment costs. It added new eligibility requirements, reduced the length of time someone could collect benefits and tied maximum number of available weeks to the state jobless rate.
The changes have been challenged by worker advocates who say lawmakers have tried to prevent people from receiving benefits to which they are entitled.
Mike Evangelist, a policy analyst with the National Employment Law Project, said that, during the past year just 16 percent of people who applied for benefits under the state program — the first 26 weeks of payments — were deemed eligible. That’s the second-lowest rate in the country, he said.
“I don’t contest that they’ll be able to pay back what they borrowed,” Evangelist said. “But it’s not that everyone is finding jobs. They’re just not paying benefits, so money isn’t coming out of the trust fund.”