Las Vegas Sun

March 29, 2024

Businesses to pay same unemployment tax rate next year

CARSON CITY – Nevada’s 56,000 businesses won’t get a tax rate increase next year to rebuild the depleted fund that pays benefits to the jobless.

Administrator Cindy Jones of the state Employment Security Division accepted the recommendation of the Employment Security Council to freeze the average rate at 2 percent with an average salary of $26,400.

Jones said Tuesday the state will be “slightly deeper in debt” but “growing the economy is the driver to restoring the trust fund,” rather than raising tax rates for employers.

Council Chairman Paul Havas suggested keeping the current rate. He said Nevada has the lowest rate assessed to employers in the nation.

It means the state will have to borrow more from the federal government to pay 26 weeks of benefits to the jobless. The fund is currently $736 million in the red.

Jones said the theory has been to raise the tax rate in good times to build a surplus and keep it low in depressed periods. But the rate was raised from 1.3 percent last year to its current 2 percent. She said that was due to the unusual downturn in the economy.

The only public comment came from Ray Bacon of the Nevada Manufacturers Association, who recommended the average rate be increased to 2.5 or 2.75 percent. "I would like to get out from the federal thumb,” he said, referring to the federal loan.

The council meets each October to make a recommendation and Jones decides whether to accept or change it.

Employer rates are based on worker turnover. A business with the lowest turnover pays a rate of 0.25 percent, or $66 per year on each worker. An employer with the highest turnover pays 5.4 percent, or $1,425 per worker each year.

New businesses pay a rate of 2.95 percent for up to four years before they get an experience rating on their turnover.

Bacon said the division should recommend to the next Legislature to raise the 5.4 percent rate to a higher level for those companies with the highest turnover.

Bill Anderson, chief economist for the state agency, said the recent 13.2 percent unemployment rate is expected to hold “fairly steady” for the rest of the year, then he expects a gradual decline to 11.5 percent in the coming year.

Nevada added 400,000 jobs during the boom in the mid-2000s, but lost 190,000 jobs in this recession, Anderson said.

David Schmidt, an analyst for the division, said the state was paying out $100 million a month in jobless benefits in 2009, but that has declined to $40 million.

The division will hold a workshop on Oct. 24 to receive comments, but Jones said she would stick to her decision unless there was a major development.

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