2015 unemployment tax would effectively be same
The Employment Security Council voted Wednesday to recommend a rate schedule for unemployment insurance that will have most businesses effectively pay the same amount in 2015 as they paid this year.
“From the division’s perspective, one of the important things discussed was stabilizing the tax rate,” said Employment Security Administrator Renee Olson.
Carole Vilardo of the Nevada Taxpayers Association and Jim Nelson of the Nevada Association of Employers both recommended the council stick with the 1.95 percent rate imposed this year.
But member Paul Barton moved for a 2 percent rate he said would result in the same overall payment for businesses, “while giving us a benefit to the Trust Fund.”
At 2 percent, more money would go into rebuilding the Unemployment Trust Fund in case of a future recession. But the total premiums would actually go down a tiny bit because the special assessment paying off the bonds sold to eliminate the debt owed the federal government is lower by seven tenths.
All but one member of the council voted for the 2 percent rate.
During the recession that started in 2007, the state went from a trust fund balance of nearly $800 million to, at one point, owing the federal government $800 million.
The bonds approved a year ago were sold to pay off that debt rather than pay the federal government interest for years.
Council Chairman Paul Havas said building up the state’s surplus could enable the state to pay off those bonds earlier, which he said would eliminate the bond assessment and enable the division to lower the unemployment insurance premiums paid by Nevada businesses by more than a half percent.
Nevada businesses pay unemployment insurance premiums to both the state and federal government. The federal rate is six tenths of a percent of payroll up to $7,000 in wages. The state premium ranges from a quarter percent for businesses with the lowest employee turnover to 5.4 percent for those with the worst records.
Olson said the division hopes to pay off the bonds by the end of 2017.
The amount the division was paying out to jobless workers peaked at more than $100 million a month in 2009, forcing the state to borrow heavily form the federal government. Economist Dave Schmidt told the council that is now down to about $30 million a month and, with the current insurance rates, the state has been able to put $217 million into its Trust Fund — nearly $80 million more than the division expected by this point in time.
Using federal formulas, he said Nevada needs nearly $1 billion in that trust fund to avoid borrowing again if another recession hits the state.
The council recommendation will be reviewed in a small business workshop Oct. 28 and Olson will make the final decision on whether to accept the plan in early December.