Wednesday, July 31, 2013 | 4:43 p.m.
The state is moving forward to issue bonds to repay the federal government $590 million that was borrowed to pay unemployment benefits during the recession. But it’s still not settled how much more businesses will have to be assessed in unemployment taxes to pay off the bonds.
The state depleted its trust fund to pay jobless benefits during the recession and had to borrow more than $800 million from the federal government. According to Renee Olson, administrator of the state Employment Division, the state’s trust fund to pay benefits is still depleted.
At a public hearing of the Employment Division on Wednesday, economist David Schmidt said the assessment amounts are still in flux because the bond amount and the interest rate the state will pay have not been determined.
But he said businesses with high employee turnover will probably be paying higher rates. Employers with a good record of retaining workers may not be hit as hard, if at all.
There are 57,335 employers in the state that pay the unemployment tax, which ranges from a low of 0.25 percent of payroll to a high of 5.4 percent. The average statewide is 2.25 percent. The tax is imposed on a maximum salary limit of $26,400.
Olson said the division is trying to limit the impact on employers with the bond sale. The state hopes the bonds will carry a lower interest rate than the 2.58 percent now being paid to the federal government on its loan.
While the figures are still subject to change, Schmidt gave example of rates needed to cover the bond sale. An employer with a tax rate of 4.89 percent of payroll would see his rate rise to 5.05 percent. But a business with a rate of 0.99 percent would see a decline to 0.52 percent.
The Nevada Legislature gave the division the authority to go forward with the bond sale to repay the federal government and replenish the state’s unemployment trust fund. Olson said the bonds would probably be issued for a period of six to eight years.
The division will hold a hearing Aug. 27 on the regulations to sell the bonds, which Olson said would still have to be approved by the Legislative Commission.
The state Board of Finance, chaired by Gov. Brian Sandoval, would have the final say on whether to issue the bonds.
With the loan repaid by the bonds, employers will benefit by receiving a full federal tax credit, Schmidt said.