Bond sale to cover unemployment benefit loan supported, but not contribution to make fund solvent

By Cy Ryan

Tuesday, Aug. 27, 2013 | 4:28 p.m.

Business representatives voiced their support Tuesday for the sale of $570 million in bonds to repay the federal government for the loan it made to Nevada to cover unemployment benefits during the recession.

Depending on the interest rates on the bonds, the state Employment Security Division says the sale will save money for more than 57,000 employers in the long term.

Backing came at a public hearing held by the division from the chambers of commerce in Las Vegas, the Nevada Resort Association, the Associated Contractors and the Nevada Manufacturers Association.

Paying off the federal debt with the bonds would mean an end to the interest payments made on the federal loan. This year, the state paid $17 million in interest. The plan is for the bonds to come in at a lower interest rate.

Renee Olson, administrator of the division, said a decision will be made in one month about whether to increase the sale amount by $800 million to bring the depleted state trust fund to solvency.

“We want to go fix the trust fund so we don’t go back to the federal government for a loan,” if the economy goes sour again, Frank Woodbeck, director of the Department of Employment, Training and Rehabilitation, said the public hearing.

Employer representatives said they wanted more time to analyze the impact if the $800 million is added.

The rates that employers will pay to retire the bonds will depend on the turnover in their business. Those rates won’t be known until after the bonds are sold.

The average tax rate for employers is 2.25 percent for the first $26,000 of employee wages.

Brian Reeder of the Associated General Contractors said the construction industry got hit hard during the recession. He suggested that each employer pay an equal amount to retire the bonds instead of the rate being based on the turnover of a company.