Spokane Journal of Business

Potential unemployment tax hikes concern builders group

State’s post contrasts association’s forecasts

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Members of the Associated Builders & Contractors’ Inland Pacific Chapter have expressed concerns to Gov. Jay Inslee’s office about the possibility of businesses experiencing steep unemployment insurance rate hikes in coming years.

The local chapter began expressing its concern publicly at the beginning of October following the issuing of a press release from Washington state Employment Security Department at the end of September.

ESD on Sept. 30 announced there wouldn’t be a solvency tax for employers in 2021, which would result in a savings for businesses of close to $200 million. The savings was based on a higher-than-expected unemployment trust fund balance.

Per state law, ESD is required to impose the 0.2% solvency tax on businesses if the unemployment trust fund is projected to fall below seven months of reserves.

However, ABC responded with a letter to its members arguing that there will be “at least an $800 million unemployment insurance tax hike for 2021, with additional increases to follow.”

Suzanne Schmidt, president and CEO the Spokane-based ABC chapter, asserts that, as statewide businesses shuttered or reduced operations considerably due to COVID-19, the ability for the unemployment trust fund to remain at previous years’ levels isn’t possible without unemployment taxes increasing on businesses still operating.

The unemployment insurance trust fund, which provides unemployment benefits, is funded exclusively by employers.

“Small businesses, and businesses that didn’t need to lay off workers, could see their unemployment insurance tax rates climb by 200% to 300%,” Schmidt says.

The association is asking that funding from the Coronavirus Aid, Relief, and Economic Security Act be used to help boost the unemployment trust fund.

Schmidt says ABC members aren’t yet feeling the pinch of a possible unemployment insurance tax increase.

“Our immediate concern is for the hospitality industry ... the hotels and restaurants and the service industry,” she says. “They’re not operating at capacity.”

Kevin Blocker
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