Wednesday, May 29, 2024

Louisiana committee advances bill to let businesses put off paying unemployment taxes, raising trust fund concerns

by BIZ Magazine

By David Jacobs | The Center Square

(The Center Square) – A Louisiana House of Representatives committee on Wednesday voted to let businesses delay making required payments into the state fund that provides unemployment benefits.

The change was touted as a way to help struggling businesses improve their cash flow, though state officials said it could harm the trust fund, which currently is subject to unprecedented demand.

Gov. John Bel Edwards by executive order allowed employers to delay making their payments for the first quarter of the year. Senate Bill 461 by state Sen. Mike Reese, a Leesville Republican, would let businesses defer by two months past their due date payments for the second and third quarters.

Jim Patterson, who lobbies for the Louisiana Association of Business and Industry, said it would have “no adverse impact” on the trust fund because the taxes still would be due before the end of the year.

Senate Bill 461 would codify Edwards’ proclamation that benefits for people unemployed because of the COVID-19 response would not be charged against the claimant’s previous employer. It also would prevent the state from recouping those expenses from all businesses as it normally would when such costs aren’t collected, saving business owners “hundreds of millions” of dollars, Patterson said.

“We’re trying to help businesses stay in business,” he said.

But as Congress considers sending states money to shore up their unemployment funds, delaying payments into the fund could make it less likely that Louisiana will get its share, said Ava Dejoie, secretary of the Louisiana Workforce Commission.

“We don’t want to codify anything that may impede our ability to have the trust fund infused,” she said.

On Thursday, officials said the state’s unemployment trust fund held about $840 million, enough to last about 16 weeks at the current rate of spending. Officials don’t know how much the burn rate might change as business restrictions put in place to contain COVID-19 are loosened and more people go back to work.

When the total falls below $750 million, the amount of a company’s wages that are taxable increases, benefits decrease, and a program that helps businesses train workers goes away. By delaying payments, the state will hit those triggers faster, Dejoie said.

Even after the first delay was announced, Dejoie said most companies still paid on time, in part because many were able to pay out of money they received through the federal Paycheck Protection Program. She said she was worried many more companies would choose not to pay on time for the second and third quarters.

“Our trust fund will continue to go down as long as we are making payments out of it,” said Margaret Mabile with the Workforce Commission. “But if we’re not recouping some of it as we go, it will drastically go down at a greater rate.”

You may also like

Update Required Flash plugin