Lawmakers continue effort to shield businesses, workers from depleted unemployment fund balance tax increases

By David Jacobs | The Center Square

Louisiana legislators continue to try and shield businesses and workers from tax increases set to kick in because of a low unemployment fund balance, though there is some disagreement about how to proceed.

Senate Concurrent Resolution 9 by Senate President Page Cortez, which the House of Representatives Appropriation Committee advanced Monday, would suspend the “solvency tax” on businesses that normally kicks in when the fund dips below $100 million and the state has to start borrowing money from the federal government to pay legally required benefits. The tax can cost up to 30 percent of an employer’s regular quarterly contribution to the unemployment trust fund, which the Legislative Fiscal Office calculates as a tax increase of up to $61.6 million on businesses statewide.

The Louisiana Workforce Commission has borrowed $61 million so far to pay unemployment benefits, House Appropriations Chairman Jerome Zeringue said. The money can be drawn down interest-free until next year and repayments must begin next September.

As of Oct. 10, more than 155,000 Louisianans continued to receive unemployment benefits after the state imposed restrictions to slow the spread of COVID-19. That number doesn’t include the more than 134,000 self-employed workers receiving federal benefits who don’t qualify for state benefits.

House Bill 70 by House Speaker Clay Schexnayder, currently awaiting a possible vote for final passage on the House floor, would repeal rather than suspend the solvency tax. Sen. Mike Reese, who presented the senate president’s bill, said federal regulators are OK with suspending the tax but are wary of repealing it without replacing it with a new funding source for repayment.

Reese said the suspension will put off the increase until after the next regular legislative session, when state lawmakers have a better idea about how the state’s economy has recovered and whether the federal government has made more aid available.

“We completely have the opportunity to do the exact same thing in the next regular session if we collectively believe that’s the best decision for the state,” he said. “This would get us through to the next regular session.”

Senate Bill 55, also awaiting a vote for final passage in the House, would freeze in place the unemployment tax and benefit structure currently in use. The taxable wage base per employee would remain at $7,700, and the maximum weekly benefit would remain $247. Normally the wage base increases and the maximum benefit falls as the fund is drained.

Senate Concurrent Resolution 5, which also is pending final passage in the House, works with SB 55 to suspend the need to recalculate benefits and the unemployment fund tax base.