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State Running Out of Money to Pay Unemployed

August 20th, 2009 by flanews

The state is almost out of money to pay unemployment benefits to thousands of jobless Floridians. 650,000 Floridians are receiving unemployment pay. As early as Monday the fund to pay claims could be at zero. As Whitney Ray tells us, once the fund is dry the state will have to borrow money to pay claims.

The state has exhausted its ability to pay unemployment claims. Early next week the federal government will have to pump millions of dollars into the states unemployment trust fund; money that will eventually have to be paid back. The loan will be interest free through 2010, but the debt could reach a billion dollars or higher, forcing the state to pay millions in interest alone.

It wont just be federal dollars keeping the fund in the black. The unemployment tax on businesses will go up January 1st. Businesses will have to pay unemployment taxes on the first 8,500 dollars of each employees salary; before only the first 7,000 was taxable. The Florida Institute of CPAs says the tax amount could go up even more to pay back the loan.

We do anticipate a rate increase, but we cant quantify it at this point. Primarily because we dont know the length of the recession, we dont know how many employees will be remaining in the state after the end of the recession, said Vicki Meyer, a spokeswoman for the FICPA.

Even though the state is out of money, people receiving benefits wont notice. Checks will still go out as scheduled. On January 1st, 2008 the states unemployment compensation trust fund had a balance over two Billion dollars. As of Wednesday the fund was down to just 82 Million.

Posted in Business, Economy, State News, Unemployment | No Comments »

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