Nevada employers may have to increase their unemployment insurance contributions next year as the state works to close a budget problem in its benefits pool.
The Employment Security Council has recommended a net increase from 1.95 percent to 2 percent in 2015, a change that would increase the estimated revenue collected by $15 million statewide. The average cost per employee with wages greater than or equal to $27,800 would rise by $14 per year.
The Employment Security Division of the Employment, Training and Rehabilitation Department held a Small-Business Workshop on Oct. 28 at the Legislative Building in Carson City regarding the proposed regulation.
David Schmidt, an economist for the Employment, Training and Rehabilitation Department, said the goal of increasing the average unemployment insurance contribution rate is to improve the Unemployment Trust Fund balance by the end of 2015.
“Though it is a higher rate than we paid during the 1990s until the recession, it is in line with historic norms,” he said of the rate increase. “Restoring the trust fund balance is something we’re working toward, and we’re continuing to make progress.”
During the recession, the fund was paying out more in unemployment benefits than it was collecting in payroll taxes. That forced the state to turn to the federal government for loans to make up the difference and keep unemployment checks flowing.
According to department Administrator Renee Olson, about $846 million was the most that was borrowed from the federal government, which occurred in April 2012.
“Last year we had the balance down to $600 million and we used bonding to refinance the debt,” she said. “At this point we are due to make our first payment on the bond this December and the final amount is due by June 2018, however, we expect to be able to call those bonds early at the end of 2017.”
A spokeswoman for the Nevada Taxpayer’s Association, who also spoke on behalf of the Las Vegas Metro Chamber of Commerce at the Oct. 28 meeting, said both organizations support the rate increase.
According to Olson, no public comment in opposition has been received.
If the unemployment insurance contribution increases, Edgar Roberts, chief of contributions of the Employment Security Division, said about $546 million will be generated during 2015 for the Unemployment Compensation Trust Fund.
“Implementing a 2 percent average rate will continue the stability of the overall tax for employers,” he said. “The rating system is designed to ensure that employers are fairly rated based on their unique experience with unemployment regardless of size or industry type.”
Roberts said there is no additional cost for the enforcement of the regulation.
Olson will decide whether to adopt the new unemployment insurance tax rate following public comment at a Dec. 3 hearing at 2 p.m. in Carson City.