Most states will raise taxes on businesses to replenish unemployment benefit trust funds, a new survey shows.
Unemployment taxes remain low by historical standards: the survey, by the National Association of State Workforce Agencies, found that states have effectively cut the unemployment tax rate on businesses by 64 percent since the unemployment program began collecting taxes from employers in 1938.
Arkansas business and labor couldn't reach agreement on a path to repay the fund here. Labor opposed benefit cuts. Legislation was adopted to allow for a bond issue to repay money owed the federal government, with a higher tax used to pay off the bonds. Separate legislation backed by the chamber of commerce has already reduced unemployment benefits in several ways.
The Arkansas State Chamber of Commerce will hold a meeting on repaying the debt May 4. A note from director Randy Zook said the debt in Arkansas is nearing $360 million. He said a bond issue, which would require an election, is one option, but not the only option for dealing with the debt. He didn't elaborate on other strategies.
NOTE FROM RANDY ZOOK TO CHAMBER BOARD MEMBERS
We need your help in deciding the best course of action regarding the Unemployment Insurance Trust Fund debt , which is now just shy of $360 million. Arkansas employers are responsible for repayment of this debt, known properly as Title XII advances from the U.S. Department of Labor. This affects ALL AR employers who pay Unemployment Insurance taxes.
The just-concluded General Assembly passed Act 1125, which allows for special revenue bonds to be issued to repay the balance. That is one option. There are others, and we need your advice and involvement in this process to ensure we are choosing the best possible option.
Please plan to join us on Wednesday, May 4, at 11:30 for a series of working lunch meetings to discuss this issue in detail. It will be very helpful, too, if you can take time before the meeting to review your company’s UI costs so you can have that understanding as you weigh the possible effects on your business. We should conclude the meeting no later than 1:15.