Strong state economy prompts unemployment tax cut

Employers will pay an average unemployment tax rate of 1.29 percent on their employees' wages starting in January. The tax rate has not been that low since 1992.

Stan Jones, the division's administrator, said the decision to reduce the tax rate - which is 1.4 percent this year - was based on forecasts that Nevada's economy will continue to be robust.

"The forecast is the Nevada economy will remain stable and continue to modestly grow and expand," Jones said.

He expects the average unemployment rate in 2000 will be 4.8 percent, up slightly from the 4.5 percent average rate in 1999.

Even with the unemployment tax reduction, the Employment Security Division's trust fund should grow to $511 million at the end of 2000. The trust fund now is $464.8 million.

Jones reduced the tax based on the recommendations of his agency's independent council. Members last month proposed lowering the average rate to a 1.29 percent tax.

The administrator accepted that recommendation, and decided against lowering the rate even more.

"The philosophy is you accrue a solvent trust fund during good times so that when the economy declines there is no necessity for an increased tax rate," Jones said.

Laid-off employees can earn as much as $278 per week in unemployment compensation. Benefits last for a maximum of 26 weeks.

The 1.29 percent tax rate is an average rate. The actual tax rate varies depending on the company and the number of employees it has laid off over the years.

More than 42 percent of all Nevada companies pay the lowest tax rate of 0.25 percent. About 3 percent pay the highest rate, 5.4 percent. Jones said the highest taxpayers include construction companies that regularly lay off workers.

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