Nevada’s Employment Security Council is recommending an overall reduction in the unemployment insurance rate that will save the 48,513 businesses in the state millions next year.
The council met this week and decided to recommend the average tax rate be cut from 1.95 percent of payroll to 1.85 percent. With the additional 0.05 percent added for the Career Enhancement Program, the total rate would be 1.9 percent, the lowest it has been in years.
While that doesn’t sound like much of a change, it’s worth an estimated $269 million in 2019.
Employment Security Administrator Renee Olson is expected to formally approve the rate on Dec. 7.
The recession emptied some $700 million from state’s unemployment trust fund and forced the state to borrow another $800 million from the federal government to pay unemployment benefits.
The state issued bonds to pay off that debt to the federal government and, once it was paid, eliminated the bond assessment, saving employers some $223 million.
Now, she said, the state is in good enough shape to lower the base rate itself.
Between the two, Gov. Brian Sandoval said businesses will save nearly $500 million this coming year, money he said they can pass on to workers or reinvest in their companies.
Olson said the 1.85 percent rate is projected to bring in $695.5 million in 2019. Unless a recession hits, Olson said the projected payouts will total just $281.8 million.
Olson said the reduction recommended this week would reduce the average annual unemployment insurance cost from $624 to $592.80 per worker each year.
In addition, the continued economic recovery has enabled the Trust Fund to make a dramatic recovery. She said as of this week, there is $1.41 billion in the Trust Fund, which her staff economists say should be enough to get Nevada through the next recession without borrowing federal money. Barring the onset of a new recession, she said the state is on track to have $1.8 billion in the Trust Fund by the end of the year.
“We’re in pretty good shape,” she said Thursday.
While the overall average rate will total 1.9 percent, employers don’t all pay that amount. They are rated in 18 different categories according to employee turnover and the burden those employees impose on the Trust Fund. They pay rates ranging from 5.4 percent to just a quarter of a percent.