State officials are predicting that the current surplus in the state’s unemployment-benefits trust fund will help keep payroll taxes low for employers.
The Unemployment Insurance Trust Fund pays out benefits to workers who lose their jobs because of layoffs or other circumstances beyond their control. The money comes from payroll taxes collected from employers.
The unemployment fund ended 2017 with a surplus of $1.5 billion. During a presentation before the state’s Unemployment Insurance Advisory Council on Thursday, Tom McHugh, director of the Unemployment Insurance Division’s bureau of tax and accounting, said all signs suggest the surplus will remain substantial. By March 30, the surplus came in at $1.4 billion dollars, he reported. That’s about a 29.3 percent increase from the amount of money that was in the fund at the same time last year.
The fund went deep into the red in the great recession. To help replace the lost money, employers had to begin paying taxes at higher rates.
The fund did not return to having a surplus that triggered lower rates, meaning it had a surplus of more than $900 million, until 2016. Crossing that threshold lowered tax rates for the following year.
The rates were subsequently lowered again, this time for this year, when the fund’s surplus exceeded $1.2 billion in 2017.
McHugh predicted on Thursday that the fund’s balance would hit $1.6 billion by April 30, meaning employers’ lowered tax rates would hold steady in 2019. For the tax rates to increase again, the fund’s surplus must be below $1.2 billion on June 30.
McHugh noted that the highest balance the fund has ever reached was $1.8 billion and the lowest balance reached was $1.6 billion in the red.Follow @erikastrebel