State Set to Pay off Massive Federal Loan

Besides the national unemployment rate dropping to 7.7%, Florida’s job market is showing signs of strength. The state is set to pay off a three billion dollar loan from the federal government to pay unemployment claims and that means business taxes will drop.

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Nearing the finish line; for three years Florida’s businesses have been paying back a massive loan borrowed from the federal government to pay unemployment claims.

“By May, 2013, we will have repaid the outstanding balance.”

James Miller is a spokesman for the Department of Economic Opportunity. Miller says the improving economy is allowing the state to make huge payments on the loan. “More people receiving paychecks instead of benefits, reduces the cost to the state and therefore we don’t have to pay as much in claims each month. It allows us to pay back the amount much quicker.”

So how bad did it get? Since August of 2009, the state has borrowed 3.3 billion dollars to pay claims and in the process accumulated 100 million dollars in interest.

To pay the money back, the minimum unemployment tax rose from eight dollars an employee in 2010 to 121 dollars today, hitting businesses trying to pull out of the Great Recession.

But now with the state slated to pay the loan back by May of next year, the unemployment tax will start inching back down and businesses will get a 40 dollar break per employee.

The news is being received well at the Wharf Express, a seafood restaurant less than a mile from the state capitol.

“Every tax affects us; a lot of people don’t realize that. My biggest thing is we’re in a down economy, a lot of people don’t realize that interest you just spoke of, the business owners are paying a good percentage of that,” said owner Joey Costanzo.

The owner employs seven employees which means his taxes will drop by 200 bucks next year, a little relief as the economy slowly recovers.

The improving economy isn’t the only thing propelling the state in to the black. A new law has also made it more difficult for people to qualify for unemployment payments saving the state money.

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