This comes after a three-year freeze on tax rates, which otherwise would have risen through the roof thanks to the recession, as many Idaho workers were laid off. While the freeze saved Idaho employers millions, it also depleted the state unemployment trust fund, and the new legislation is designed to keep the fund solvent.
The freeze ended Jan. 1. Without changes in the law, unemployment tax rates would now shoot up 113 percent. Instead, the compromise legislation calls for them to rise 12.5 percent this year, and then to rise or fall as needed each year, in increments rather than sudden jumps. Benefits would be slightly reduced – the maximum payment would drop from $325 a week to $312 in 2005, plus some workers would get a week less of benefits and others would take longer to qualify. The benefits and tax rates were tied together, so in the future, when the economy recovers, tax rates would go back down and benefits would go back up.
“You’ve got to look at both sides,” said Dave Whaley of the Idaho AFL-CIO. “We’ve got to have the jobs for the workers. We’ve also got to have those unemployment benefits that will carry them to another job.”
Teresa Molitor of the Idaho Association of Commerce and Industry said, “The business community was prepared to absorb a tax increase of some sort. … We think that this package is kind of the definition of fairness.”
Roger Madsen, state Commerce and Labor director, noted that eight states have seen their unemployment programs go bust, forcing them to borrow money from the federal government, which then forces even higher tax increases. “It’s a very important program, very controversial,” Madsen said. “It’s doing its job in Idaho.”