Official: Don’t raise business tax to pay jobless fund

By Cy Ryan

Friday, Sept. 18, 2009 | 3:59 p.m.

CARSON CITY – The state has applied for a $264 million loan from the federal government to pay more than 100,000 jobless Nevadans but the chairman of an employment council doesn’t want to raise the rates charged to businesses next year.

“My feeling personally is we keep the tax rate as low as possible during this period,” says Paul Havas, chairman of the state’s Employment Security Council.

His feelings echo those of Assembly Speaker Barbara Buckley, D-Las Vegas, who says now is not the time to raise the rates on businesses.

To pay the unemployment checks, more than 60,000 businesses are assessed with a tax rate from 0.25 percent to 5.40 percent on up to $26,600 of the wages of a worker. That wage level will rise to $27,000 next year.

But the state’s jobless fund will be dry in October and it will have to borrow from the federal government. And if the economy doesn’t improve in 2010, the state will have to borrow $1 billion, says Cynthia Jones, administrator of the state Division of Employment Security.

While the rates to employers could increase, the weekly checks to the jobless will not be lowered, says Kelly Karch, deputy administrator of the state Division of Employment Security.

The maximum payout now to an unemployed person is $400 a week plus an extra $25 thrown in by the federal government. The payment level is set in the law, Karch said.

The nine-member council meets Oct. 6 to make its recommendation to Jones, who makes the final decision Dec. 7.

Havas says he hasn’t received the information for the meeting from the state agency. But he adds, “I want to keep rates as low as possible with a counter cyclical approach to this.”

“We can’t raise the rates with this type of economy,” said Havas, a Reno businessman.

The average rate now is 1.3 percent with the payment of $353 per year per employee. New businesses must pay a 2.95 percent rate for about three years and then they receive an “experience rating” based on their worker turnover.

About 55 percent of businesses have the "experience rating."

The state is asking to borrow $48 million in October from the federal government, $120 million in November and $96 million in December to pay the unemployed, he said.

Havas said his concern is with the economy in 2010 and will it pick up.

Jones said the state is now sending out about $35 million in jobless benefits a week to an estimated 110,000 recipients.

The council will take public comments at its meeting.