2018 BRINGS CHANGES TO MANY STATES’ UNEMPLOYMENT INSURANCE TAXES

By January 29, 2018Blog

Most state legislatures are in full swing at the beginning of every year. This typically means a flurry of changing laws and taxes. The balloon squeezing is in full effect.

It’s not uncommon for state legislatures to take a look at state unemployment insurance taxes and benefits, because cutting either or both of these things often means money saved for employers. State legislatures can often find political room to cut government benefits that are not being used by masses of taxpayers like unemployment benefits were being used a decade ago.

Here are some of the most recent changes to state unemployment insurance taxes and benefits.

Idaho

The Idaho State Senate approved a House bill last week by a vote of 33-0 that cuts state unemployment insurance taxes for employers by 30 percent for a total of $115 million dollars in savings over the next three years. The bill now goes to Gov. C.L. “Butch” Otter’s desk for signing. Gov. Otter is expected to sign the new tax rates into law. The pending legislation cuts the divisor that determines the base rates for unemployment insurance tax from 1.5 to 1.3.

According to the U.S. Department of Labor’s Office of Unemployment Insurance, Idaho currently has a healthy unemployment insurance trust fund.

Missouri

Using low unemployment as their reasoning, Missouri lawmakers are pushing a reduction in unemployment benefits for workers from the national benchmark of 26 weeks to only 13 weeks. If the legislation becomes law, Missouri would match North Carolina with a low of 13 weeks of benefits and rank just slightly better than Florida’s lowest-in-the-nation 12.

The savings for employers is found in a drastic reduction in unemployment claims liability. The legislation does increase the weeks of available benefits if the unemployment rate rises above 6 percent.

According to the U.S. Department of Labor’s Office of Unemployment Insurance, Missouri’s unemployment insurance trust found is not healthy. This means if there is a slow-down in the economy accompanied by rising unemployment, Missouri runs the risk of having to borrow funds from the federal government as they did during the last recession. That borrowing is then passed onto employers in the form of higher state unemployment insurance taxes.

Tennessee

Earlier this month, Tennessee’s low unemployment and current unemployment insurance trust fund balance triggered an automatic wage base cut on what employers pay for unemployment insurance from $8,000 to $7,000, effectively reducing what most employers pay to the state for unemployment insurance fees by 12.5 percent. This cut follows a cut in 2017 that lowered the taxable wage base fall from $9,000 to $8,000.

These cuts are being enacted even though the U.S. Department of Labor’s Office of Unemployment Insurance’s numbers say Tennessee is below a “safe” unemployment insurance trust fund balance – a balance that could handle an economic slowdown without the need of additional borrowing.

Colorado

Colorado lawmakers are currently deliberating on a state unemployment insurance tax increase, but nothing has been proposed as of yet. Colorado still owes the federal government money from funds borrowed during the Great Recession to keep its state unemployment insurance trust fund solvent.

And then there is Ohio

From The Columbus Dispatch, “The state’ own calculations put the Ohio Unemployment Compensation Trust Fund at more than 60 percent below the “minimum safe level” at the end of 2017, which means the state is far from ready to weather even a moderate recession. The fund is predicted to be insolvent by 2020 with a moderate recession and by 2021 even without one.”

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