Panel Endorses Unemployment Insurance Tax Cut Overwhelming Support Expected By Full Senate This Week

Gov. Phil Batt’s plan to slash unemployment insurance taxes by another $31 million this year won unanimous approval from a Senate committee Tuesday, leaving it just one more vote short of the governor’s desk.

“This will give us a tax schedule that is more responsive to the economy,” Dwight Johnson of the state Labor Department told the Commerce and Human Resources Committee.

Committee endorsement came just a day after the House approved the legislation on a 69-0 vote. Overwhelming approval was expected by the full Senate later this week.

“While the unemployment insurance fund will continue to be sound, this action will pump capital back into the economy to create jobs, better pay and more opportunities for Idahoans,” Batt said in his budget message two weeks ago.

Analysts estimate that the new rate schedule, effective immediately, will save Idaho’s 36,000 employers - with payrolls covering 400,000 workers - more than $113 million through 2001.

The cut in the unemployment insurance tax rate will be the fifth since 1983 when the tax rate was jacked up to 2.4 percent, the highest in the nation, and worker benefits were slashed to keep the trust fund from going bankrupt during one of the state’s worst recessions.

Batt secured a nearly $24 million cut in the tax last year. That was coupled with reduction of the number of working weeks needed for an employee to requalify for jobless payments and a change in the calculation to increase the number of weeks benefits are paid under certain conditions.

Even with those changes, however, officials said the trust fund balance continued increasing to over $330 million at the end of 1997. And Batt directed a special task force that included both labor and business to work toward bringing Idaho’s unemployment compensation program toward national average rates.

The tax cut awaiting final legislative action lowers the average rate to 0.8 percent, just a tenth of a point above the national average. Even employers paying high taxes because they have large unemployment claims - typically seasonal employers - benefit from the new rates.

This time around, however, organized labor’s goal was to limit the erosion of a benefit package that still exceeds the national average because of Idaho’s large seasonal work force.

The AFL-CIO headed off an attempt to boost the earned wages needed to requalify for benefits by 45 percent, which would have put it in line with the national average. The organization accepted just a 9 percent increase that still keeps that benefit ahead of the country as a whole.