State’s bond sale to benefit businesses

By Cy Ryan

Tuesday, Oct. 29, 2013 | 11:34 p.m.

Nevada businesses are going to enjoy a small cut in their annual unemployment taxes next year.

The state Treasurer’s Office Thursday sold $548.9 million in bonds at an interest rate slightly below 1 percent on Tuesday. This money will be used to retire a federal loan to the state during the recession to cover benefits for the unemployed.

And it will reduce the interest rate businesses have had to pay on the federal loan.

“It was a successful sale,” said Lori Chatwood, deputy treasurer.

At the same time the bonds were being sold, the state Employment Security Division held a public hearing and made a preliminary decision to lower the average unemployment tax rate from 2.25 to 1.90 percent.

Division Administrator Renee Olson said this bond sale would save employers $24 million. Without the bond sale, the average tax per worker would have been $717 but that will be reduced to $712.

Businesses pay an unemployment tax ranging from a low of 0.25 percent to a high of 5.4 percent, depending on employee turnover.

Olson will hold a formal hearing on Dec. 4 to set the rate. But she indicated she supported the reduced rate.

Brian McAnallen, vice president of government affairs for the Las Vegas Metro Chamber of Commerce, said business would be “held harmless” in the bond sale plan. He told Olson that this would help firms struggling to recover from the recession.

Chatwood said Goldman Sachs and RBC Capital Markets purchased the bonds at a .996 percent interest rate. Those two firms are the senior underwriters and will then merchandise the bonds to other investors.

She said 60 companies have expressed interest in buying the bonds.

The state Board of Finance had authorized the issuance of $1.3 billion in bonds. Chatwood said the $548.9 million will be used to pay off the federal debt. Only about $50 million of the bonds will go toward replenishing the state’s unemployment trust fund used to pay benefits to the jobless.

Employers are now paying a 1.12 percent interest rate on the federal loan but that would rise to 1.15 percent this year if the loan was not paid off.

During the recession, the state had to borrow more than $800 million from the federal government to provide the unemployment checks to the jobless.