Sunday, May 26, 2024

Officials again delay triggering higher business taxes

by BIZ Magazine

By David Jacobs | The Center Square

Louisiana officials on Tuesday again postponed triggering the higher business taxes and lower worker benefits that go along with having a nearly insolvent unemployment trust fund.

Employers pay taxes to support the fund that pays for benefits for unemployed workers. State law calls for the Revenue Estimating Conference to certify a projection of next year’s fund balance by the end of September.

As the fund balance falls, the amount of an employer’s payroll that is taxable increases and benefits decrease so the fund can remain solvent. But the changes wouldn’t kick in until next year.

So on Tuesday, the REC punted on certifying a fund projection and planned to hold another meeting no more than 10 days after the current special session concludes. It was the second time in five days the conference decided not to adopt a new estimate. In the meantime, legislators hope to find a solution that would allow them to avoid raising taxes and cutting benefits amidst the ongoing pandemic.

Senate President Page Cortez, who serves on the REC along with the House speaker, the governor’s commissioner of administration and an academic economist, said instruments up for debate during the session would change or suspend statues that call for higher taxes and lower benefits.

“We’re going to buy some time,” he said.

Economist Stephen Barnes moved to accept the Louisiana Workforce Commission’s fund balance projection, which predicts a shortfall of nearly $233 million.

“I appreciate the concern both to the beneficiaries and to the business community about what changes to rates and benefits might do,” he said. “As we sit here today, the law does lay out a schedule for us to take action, and that’s something we should do in the month of September.”

But Commissioner of Administration Jay Dardenne replaced Barnes’ motion with the substitute motion to delay action, which all four members including Barnes approved. REC actions must be unanimous.

“I understand the literal words of the statute,” Dardenne said. “However, we have a very unusual circumstance that we’re faced with right now.”

The economic restrictions meant to control the spread of COVID-19 have led to widespread job losses and unprecedented demand on the fund. The balance has fallen from more than $1 billion before the pandemic to nearly zero.

The Louisiana Workforce Commission will borrow money from the federal government to continue paying benefits through the end of the year, a process that normally would trigger additional fees for employers. State officials still are hoping for direct federal aid that would solve the problem. Other solutions could involve state surplus dollars or a bond issue.

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