Governor Jim Gibbons today announced his recommendation of a one-year reduction in unemployment insurance taxes paid by the majority of Nevada businesses. “The best way to keep jobs and encourage businesses to add new workers is make it easier for them,” Governor Gibbons said, “Nevada businesses have already been hit by an increase in the payroll tax this year. Raising the unemployment tax rate may push some businesses struggling through this recession over the edge. By temporarily lowering the unemployment insurance tax, Nevada will retain existing jobs and encourage new businesses to relocate to Nevada, creating new jobs and further diversifying our economy.”
“Temporarily reducing the average employer assessment from 1.33% to 1.0% will save Nevada businesses an estimated $70 million during calendar year 2010,” Gibbons said, “I am optimistic that by late 2010 our unemployment rate will be decreasing, we will have generated new jobs, and we can begin repaying borrowed funds to the federal government. For now, it is prudent to help Nevada employers weather the recession.”
Unemployment insurance tax rates are set annually by regulation. The Employment Security Advisory Council, a nine-member council appointed by the Governor pursuant to NRS 612.305, meets October 6 to conduct the annual public hearing regarding the unemployment tax rate for the upcoming year, and to make recommendations to the Administrator of the Employment Security Division for the next calendar year rates.
Nevada’s businesses presently pay state unemployment insurance taxes of between 0.25% and 5.4% on the first $26,600 of payroll per employee, based upon the employer’s past claims experience. The average employer pays 1.33%. New businesses in Nevada pay 2.95% for up to 4 years, until they have an experience rating.
Funding for unemployment insurance trust funds is countercyclical, meaning that fund balances are built up during a prosperous economy and utilized during an economic downturn. Due to excellent management of its Unemployment Insurance Trust Fund, Nevada has been able to avoid borrowing federal government funds to pay unemployment claims until mid-October, 2009 – despite having the second highest unemployment rate in the nation. Twenty-two states are currently borrowing funds from the federal government to pay their unemployment claims, and 40 states will be borrowing funds by the end of 2012.