Thursday, October 23rd, 2014

Scott-O-Meter

Lower unemployment costs for employers


"Make unemployment benefits more affordable."


Updates

Gov. Rick Scott signs law to cut unemployment benefits, easing employer burden

Rick Scott's seven-step plan "to turn Florida around" includes making unemployment benefits more affordable.

It's part of his agenda of regulatory reform that reduces costs for businesses. 

In June 2011, he signed a law that cut unemployment compensation benefits, which was projected to save the state's employers $103 million a year, according to Department of Economic Opportunity spokesman James Miller.

Still, businesses will pay more in 2012.

Why?

Here's how Florida's benefits system works: The state pays benefits from a trust fund that's fueled by taxes on Florida employers. Florida law adjusts tax rates each year to keep the fund healthy. But in 2009, the unemployment crisis drained it. That required the state to start borrowing from the federal government to pay benefits, and also would have triggered higher rates on employers. But lawmakers put off raising the taxes in an attempt to shield recovering businesses. For 2012, statute-driven increases go back into effect.

But the law signed by Scott will offer some relief.

The law cut the maximum number of weeks an unemployed worker could collect benefits from 26 to 23 — and created a sliding scale that sends that number to 12 weeks when the average unemployment rate drops below 5 percent. It also makes it easier to deny benefits for "misconduct," such as chronic absenteeism or other rule violations.

The misconduct rules resulted in 1,672 denials from Aug. 1 to Oct. 15, saving the trust fund $359,047, Miller said.

Those changes lessen the burden on the trust fund — and thus, ultimately, on employers.

Meanwhile, the law tweaked the way employers' tax rates are calculated so they won't have to pay as much — the equivalent of about $30 less per employee for businesses paying the minimum unemployment compensation rate, according to the Florida Chamber of Commerce.

Now, the Florida Chamber of Commerce and other business groups are pressing for still more relief, pointing out that the minimum unemployment compensation rate is expected to jump to $171.70 per employee in 2012, up from a minimum of $72 per employee this year. (Though it would have been more without Scott's law — and it's projected to drop from there.)

To further shield employers, business groups would like a decrease in the taxable wage per worker, and an extension for replenishing the trust fund from three to six years. Those changes aren't among Scott's proposals for the unemployment system in the 2012 legislative session.

But the governor's promise was to make benefits "more affordable," and with HB 7005, they're more affordable than they would have been without the law. That's enough for us to rate this Promise Kept.

Sources:

E-mail interview with James Miller, spokesman for Florida Department of Economic Opportunity, Dec. 7, 14, 2011

Interview with Teye Reeves, director of business climate policy, Florida Chamber of Commerce, Dec. 14, 2011

Florida House, HB 7005: Unemployment compensation, accessed Dec. 12, 2011

Florida House, HB 7005: Final bill analysis, accessed Dec. 12, 2011

Department of Revenue, 2012 Unemployment Compensation Tax Rates Fact Sheet, accessed Dec. 14, 2011

Florida Department of Revenue, Post-Legislative Review, July 2011

Florida Chamber of Commerce, "FL Chamber Fights for Unemployment Comp Tax Relief," Dec. 14, 2011

The Current, "Business groups seek more changes to stem unemployment tax hike," Dec. 13, 2011

The Current, "Unemployment compensation fund on the mend as taxes rise," Dec. 1, 2011

St. Petersburg Times, "Deal struck to further cut Florida unemployment benefits," May 7, 2011

St. Petersburg Times, "It might get harder to be unemployed in Florida," March 11, 2011

Rick Scott proposes cuts to unemployment benefits

Gov. Rick Scott's plan for growing private sector jobs is focused on making life easier for business.

One piece of that puzzle, Scott said during the campaign, was to lower employer costs for providing unemployment benefits. It's businesses, after all, that pay the taxes that help cover out-of-work employees.

Scott pledged to "make unemployment benefits more affordable (for employers)," as part of his seven-step plan to create 700,000 private sector jobs. His promise was not initially included on the Scott-O-Meter, but we added it on Feb. 10, 2011, after Scott released proposed budget plans for 2011-12 and 2012-13.

Scott's budget proposals include projected unemployment tax reductions of $630.8 million by shortening the length of time out-of-work Floridians could claim benefits. Scott's plan calls for reducing the maximum time a jobless person can get state benefits to 20 weeks from 26 weeks.

That limit would fall even more if Florida's unemployment rate declined, down to 12 weeks if the rate is at or below 5 percent. (The unemployment rate as of December 2010 was around 12 percent.)

The governor also wants to "make it more difficult to qualify" for benefits, Scott budget chief Jerry McDaniel said in comments to the House Appropriations Committee on Feb. 10, 2011.

Meanwhile, the Legislature is considering its own ways to cut unemployment benefits. One proposal would make it easier for employers to challenge whether workers are eligible for unemployment and require the unemployed to do community service.

On Feb. 10, the House Economic Development & Tourism Subcommittee voted 7-4 to support a proposal that would make it easier for employers to fire workers and deny unemployment payments, and would reduce from 26 to 20 the number of weeks a fired worker could receive benefits from the state.

Between Scott's budget proposals and the early actions of the Legislature, that's more than enough for us to move this promise to In the Works.

Sources:

Gov. Rick Scott, tax relief budget proposals, released Feb. 7, 2011

St. Petersburg Times, "Gov. Rick Scott opposes president's plan to put off states' jobless debt payments, " Feb. 9, 2011

Palm Beach Post, "GOP urges strict rules for jobless: ‘Get real"," Feb. 7, 2011

St. Petersburg Times, "Florida House committee approves cuts to unemployment benefits," Feb. 10, 2011 
 
Florida House unemployment benefits bill, Feb. 10, 2011

Jerry McDaniel, testimony to the Florida House, Feb. 10, 2011