With state $773 million in the hole, employers could see increase in jobless tax

By Cy Ryan

Friday, Sept. 30, 2011 | 11:53 a.m.

The state has borrowed $773.1 million from the federal government so far to continue paying unemployment benefits to Nevadans.

How much that will cost the more than 50,000 businesses in Nevada will be clearer on Tuesday, when officials will decide whether to raise state employment taxes next year to cover the payments.

Paul Havas, chairman of the Employment Security Council, said some believe the state's debt could reach $1 billion, but he was unwilling at this point to predict whether that means employers will pay more next year.

The council will hear econmic projections and make a recommendation on the tax rate to Cynthia Jones, director of the state Division of Employment Security, who will make the final decision.

The tax rate was raised slightly for 2011 to replenish the battered jobless trust fund. Jones said the state will continue to borrow to make the payments until tax revenues from businesses exceed the payouts.

Last year the council recommended the average rate of 1.33 percent tax per worker on a salary of $27,000 to go up to 2 percent, a modest increase.

Even with the increase, Havas says Nevada's tax rate is at or near the bottom nationally. "For the great majority of employers the tax rate is one of the lowest in the nation," Havas said.

"I don't know if we can keep it low," Havas said.

Nevada's unemployment rate in August was 13.4 percent with an estimated 176,200 jobless.

The 2011 Legislature allocated $40 million to pay the interest owed the government on its loan. Jones said this year's interest payment of $22.5 million will be made to the federal government today.

Nevada pays the first 26 weeks of unemployment benefits and the federal government picks up the rest for the extended period.

Jones said she has not been contacted by any group to make recommendations Tuesday on the tax rate. Last year, the Las Vegas Chamber of Commerce, the Nevada Taxpayers Association and the Nevada Retail Association attended the meeting to urge there not be any major increase in the employment tax.