Economy: Florida Unemployment Rose in December, Broadening the Gap Between the State and National Jobless Rates
Florida’s seasonally adjusted unemployment rate for the month of December 2009 was 11.8 percent, according to information released by the Florida Agency for Workforce Innovation on January 22, 2010. The figure represents 1,087,000 jobless persons out of a total labor force of 9,180,000. The December 2009 unemployment rate is 0.3 percentage point higher than the November 20009 rate of 11.5 percent and is 4.2 percentage points higher than the December 2008 rate.
December’s unemployment rate is the highest in the state since May 1975, when the rate was 11.9 percent.
For most of the past two years, the Florida unemployment rate has exceeded the national unemployment rate. In December 2009, the Florida rate was 1.8 percentage points higher than the national rate of 10.0 percent. The gap between the Florida and federal rates is now at its highest point since the state’s economic downturn began in early 2008.
Florida’s unemployment rate is the seventh-highest in the nation, exceeded only by Michigan, Nevada, Rhode Island, South Carolina, California, and the District of Columbia.
The counties with the highest unemployment rates in December 2009 were Flagler County (16.9 percent), Hernando County (14.9 percent), St. Lucie County (14.2 percent), Indian River County (14.1 percent), and Marion County (14.0 percent). The counties with the lowest unemployment rates were Liberty County (6.0 percent); Monroe County (7.2 percent); Alachua, Jackson, and Leon counties (7.7 percent each); Holmes County (8.3 percent); and Okaloosa County (8.4 percent).
State Budget: Legislators Begin to Address the Potential 2010 –2011 Budget Shortfall
In committee meetings on January 19 and 20, 2010, legislators began the task of addressing the potential shortfall in the state’s budget for the fiscal year that begins on July 1, 2010. Current estimates are that state revenues will be $3.2 billion less than needed for a “continuation” budget that maintains programs and services at their 2009 – 2010 level, even after taking federal stimulus dollars into account.
The shortfall represents approximately five percent of the $66.5 billion budget that went into effect in July 2009. The most recent official estimate of the shortfall was $2.6 billion, but Senate Ways and Means Committee Chairman JD Alexander (R-Lake Wales) told committee members that increased Medicaid and state retirement costs would push the shortfall to more than $3 billion.
When legislators faced an even larger shortfall in the 2009 – 2010 budget, they cut spending, increased various fees and fines by a total of $2.2 billion, and used federal stimulus funds to close the gap. Similar fee increases will meet with strong opposition this year, at least in the Senate. Speaking before the Ways and Means Committee, Senate President Jeff Atwater (R-North Palm Beach) warned against any further increase in taxes or fees. Floridians, Sen. Atwater told the budget-writing panel, “do not have one more dime to send us.” Sen. Alexander said that budget cuts of three or four percent might be needed.
House leaders also have expressed their desire to balance the budget without increased taxes or fees. In an effort to identify potential cuts, House appropriations committees began an “exercise” in which members identify their spending and budget-cutting priorities. The committees are expected to begin debating budget cuts in February.
Agriculture: State Officials Begin Assessing the Financial Impact of the January Freeze
The Florida Department of Agriculture and Consumer Services is only in the early stages of assessing the financial impact of the 10 days of freezing temperatures earlier in the month, which affected crops in most of the state. Department spokeswoman Liz Compton, in testimony before the Senate Agriculture Committee on January 19, 2010, said that the total impact was likely to be in the hundreds of millions of dollars.
Preliminary loss estimates include total damage of more than $100 million in Collier, Glades, Hendry, and Lee counties, primarily because of the loss of tomato and pepper crops. An industry source estimated that up to 70 percent of the tomato crop may have been lost statewide. Losses to the tropical fish industry may have exceeded $20 million. According to reports from growers, citrus losses may have been as low as 10 percent or less.
Ms. Compton told the committee that it may take several weeks before the department is able to compute accurate loss totals.
Taxation: Governor Crist and Legislative Leaders Try to Prevent an Unemployment Tax Increase
Responding to concerns from business leaders, Gov. Charlie Crist, Senate President Jeff Atwater (R-North Palm Beach), and House Speaker Larry Cretul (R-Ocala) on January 21, 2010 pledged to forestall a scheduled increase in unemployment taxes.
Because of shortfalls in the Unemployment Compensation Trust Fund, unemployment taxes are scheduled to rise dramatically in April 2010. The tax rate automatically increases whenever the balance in the trust fund falls below four percent of state’s taxable payroll. The trust fund has had a negative balance since August 2009, and the state has borrowed $839.5 million to cover the shortfall.
The automatic tax increases are dramatic. The minimum annual rate, which is charged to employers with the best record of keeping their employees, will rise to $100.30 per employee from the current $8.40 per employee level. The maximum rate, which is currently $378 per employee, will rise to $459.
The governor and the presiding officers of the Legislature issued a joint press release pledging to provide “relief” from the tax increase. House Speaker Cretul said, “Senate President Atwater and I asked our staffs last year to begin working on a way to provide relief to Florida businesses in the face of growing unemployment claims. Our goal is to pass legislation early in the upcoming session that will stabilize the costs of unemployment and help businesses to plan for the financial demands the jobless claims are placing upon them.”
Public Policy News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this alert or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals:
Marnie George |
Jonathan P. Kilman |
Marnie George of The George Group assists Foley on a variety of government and public policy matters as a consultant.