Union Leader: Board ends emergency surcharge on employers
By DAVE SOLOMON
CONCORD — Citing improved economic conditions, the board that controls the state’s unemployment fund has decided to end a recession-based surcharge on employers and increase benefits to many of the unemployed.
The Unemployment Insurance Advisory Council, composed of members of the business community, labor and the Legislature, voted on Tuesday to lower employer tax rates and to approve a targeted increase in the weekly benefit for claimants filing for unemployment benefits.
The elimination of the 0.5 percent emergency surcharge will save employers an estimated $29.9 million in taxes over the course of 2014, according to Gov. Maggie Hassan.
“At the height of the recession, both workers and employers had to make significant sacrifices in order to help New Hampshire’s individuals and families through an extremely difficult time,” she said. “With our economy continuing to show signs of improvement, we are now able to provide additional relief to businesses and those workers still struggling to secure employment.”
The state had a 1-percent emergency surcharge in place on employer contributions to the unemployment trust fund during the recession, in anticipation of greater demand. This recent move is in addition to a vote in August of last year by the advisory council to remove the first 0.5 percent, effective Oct 1, 2012. Tuesdays’s vote removes the second 0.5 percent, effective Oct. 1 of this year.
The Advisory Council also endorsed a plan to increase the weekly benefit amount to claimants whose base-period wages fall in the middle ranges, which includes about 59 percent of claimants. If approved by the state Legislature, the change would increase payments by an estimated 1.32 percent and cost the fund approximately $1.29 million.
The increase will apply to claimants whose earnings when working were between $11,500 and $36,500. A person who was earning $30,500 will see the maximum benefit go from $8,086 to $8,294, pending legislative approval.
“The vote by the Advisory Council is a real testament to the confidence shared by the members in the strength of the New Hampshire economy,” said George Copadis, commissioner of New Hampshire Employment Security. “We asked a great deal of the business community during the recession. Now, with the endorsement of the advisory council and the support of Gov. Hassan, I will be removing the last of the emergency surcharges on business tax rates relied upon to fund the unemployment system.”
Copadis also welcomed the increase in benefits to more than half the recipients. “Our current average weekly benefit amount is near the bottom in New England,” he said, “and while we did add some additional tiers in 2006, the rates have not been increased since 2002. I look forward to working with Gov. Hassan and the Legislature on passing this proposal to increase benefits in the next session.”
The state made several changes to the unemployment insurance program during the recession to ensure its solvency. In addition to the employer tax-rate surcharge, the wage base from which the taxes were calculated was also increased, and workers were required to go through a one-week waiting period before becoming eligible for benefits.
“As a result, New Hampshire’s unemployment system was able to weather the recession remarkably well without incurring any interest charges caused by borrowing from the federal government,” Copadis said.
Currently, 22 states are still repaying loans and interest to the federal government, he said, as they were forced to borrow to be able to continue to pay benefits during the recession.
The conservative lobbying group Americans for Prosperity issued a statement saying the 1 percent tax increase should never have been imposed in the first place.
“At the time of then-Senator Hassan’s massive tax increase on employers, there were calls for reforming the unemployment insurance system, not simply hiking the taxes,” said Greg Moore, state director.