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Unemployment tax rate to stay fixed despite jobless rate spike

CARSON CITY — Unemployment in Nevada will hit a high of 8.8 percent about this time next year, although officials said today there is more than enough money in a trust fund to pay laid-off benefits.

Cindy Jones, Employment Security Division administrator, decided to keep the unemployment tax rate at an average of 1.33 percent in 2009. That is what employers pay to cover benefits paid to laid-off workers.

The tax paid by individual employers varies and depends on their record of laying off workers.

Those who seldom have layoffs pay a 0.25 percent tax rate, while the highest rate, 5.4 percent, goes to companies with records of more frequent layoffs. The tax is paid on the first $26,600 of each employee’s wages.

Jones said she decided to keep the rate at 1.33 percent because raising it during a recession would hurt companies.

“We raise taxes in good times, not during economic downturns,” she said.

During a meeting in October, an advisory board also recommended keeping the same tax rate as in 2009 as in 2008.

But unemployment since that meeting has inched up to 7.6 percent, the highest since 1983.

By keeping the 1.33 percent rate, the Employment Security Division expects to have its unemployment trust fund balance fall by nearly $300 million by the end of 2009. Even with the decline, $450 million will remain in the fund.

“Right now we are in pretty good shape,” Jones said. “If our projections hold, we will be fine.” She noted many states, including California, are borrowing to keep up with payments to unemployed people.

Based on congressional action in November, unemployed workers in Nevada can keep receiving benefits for as long as 59 weeks.

Of that total, 26 weeks are paid through the Nevada fund, the remainder by the federal government. Unemployment checks in Nevada average about $300 a week, with a maximum of $393.

 

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

 

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