Gov. Steve Sisolak on Wednesday issued a press release saying the state will not adopt the Employment Security Council recommendation that the unemployment tax rate increase in 2022 to recover from the pandemic.
That tax funds the Trust Fund that pays unemployment benefits to workers.
“The announcement comes, after considerable analysis, conversation and discussion between the governor’s office, the Nevada Department of Employment, Training and Rehabilitation and the Nevada business community,” the release said.
This is the first time in memory a governor has become involved in this process.
The Employment Security Council voted to recommend raising the overall average rate from 1.65 percent of the first $36,000 in wages paid to each Nevada worker to 2 percent. The 2 percent would generate an estimated $675 million in 2022.
The rate is spread over 18 categories of businesses rated according to how much UI benefits their workers use. The tax rate is 5.4 percent for businesses whose workers use the most UI benefits down to a quarter percent for those with the best records.
In addition, Sisolak said there will be no charge against the rates businesses pay because of layoffs resulting from the pandemic shut down.
The overall tax rate is the average of all businesses.
The reason for the proposed increase was the need to rebuild the UI Trust Fund that pays unemployment benefits to Nevada workers. That fund was emptied by the huge number of benefit claims resulting from the economic shutdown and layoffs of thousands of Nevada workers because of the pandemic.
Nevada ended up borrowing more than $300 million from the federal government once the Trust Fund was depleted. That was paid off using federal pandemic relief funds.
A majority of council members agreed with member Mark Costa that unless they raised the rate, it would take three-plus years to replenish the Trust Fund ahead of a future economic downturn.
Council Chairman Jeff Frischmann pointed out not having to pay back the $332 million borrowed was a huge benefit to employers.
The recommendation is normally adopted with little fanfare by the administrator of the Employment Security Division.