The rates Nevada businesses pay for unemployment insurance should remain the same in 2016, if the head of Employment Security Division follows the recommendation.
Nevada’s Employment Security Council voted on Thursday to maintain an overall average rate of 2.62 percent of wages up to $28,200 a year be paid to the unemployment program. That rate is expected to generate about $546.4 million during 2016 to fund unemployment payments, pay off the program’s debt from the recession and rebuild the Trust Fund.
The rate recommended by council member Paul Barton and adopted unanimously by the panel will be the same overall as this year’s rate.
Barton said Nevada is once again experiencing good job growth and “I don’t see a recession coming.”
He said keeping the total rate the same would give the more than 62,400 businesses in the state stability.
The council’s recommendation goes first to a business workshop before ESD Administrator Renee Olson makes the final decision to implement the rates.
Nearly a quarter of the total rate, 0.62 percent of wages, is being used to pay off the bonds Nevada sold to pay back more than $500 million borrowed from the federal government to write unemployment checks during the depth of the recession.
Another quarter of the revenue is being used to replenish the Trust Fund designed to pay unemployment benefits when a recession hits.
Olson told the council the Trust Fund had $409 million in it as of Sept. 30. But economists for the agency advised according to their calculations the reserves should be about $1.2 billion to get Nevada through the next recession. They pointed out that recessions occur every five to 10 years.
Fully half the revenue, according to ESD Economist Dave Schmidt, will go to paying current benefits. Schmidt did tell council members the $409 million in reserves is, for the first time in years, higher than the total paid out in benefits during the past 12 months.
The council heard from several experts who said Nevada’s economy is recovering, jobs are being added and unemployment is expected to continue dropping.
The only public comment received during the two-hour hearing was by lobbyist Bob Ostrovsky representing the Nevada Resort Association. He said that industry supports maintaining the same rate as the current year.
The 2.62 percent rate consists of three pieces: the State Unemployment Tax of 1.95 percent, the bond repayment rate of 0.62 percent and the 0.5 percent rate dedicated to a statutory jobs training program.
Federal law requires that businesses pay all of the tax and that none of the money be used for any other purposes than supporting unemployment benefits and the employment security program.