SUTA Relief and the $146 Million Question

Gov. Haley signed legislation that will bring much needed relief to the state unemployment tax crisis faced by many businesses.

The legislation does the following:

  • Directs that the appropriations go toward state unemployment tax relief for businesses in tiers 2 through 20, which results in reductions up to 25% for 2011.
  • State unemployment tax reductions are retroactive to January.
  • Seasonal employees may be ineligible for unemployment benefits, resulting in a 3% reduction in state unemployment tax costs to businesses.
  • New companies come in at tier 12 for the first 12 months, which is a savings of approximately $200 per employee per year for new companies.
  • For 2011, companies on a payment plan will pay 0.25% penalty per month (previously set at 1% per month).
  • Companies that have a positive state unemployment tax balance will be in no class higher than class 12 for 2011 only.
  • Reduction of benefits for the newly unemployed to 20 weeks from 26 weeks, resulting in an 8% reduction in overall state unemployment tax costs to businesses.

The Senate and the House are currently tyring to agree on how much additional funds should be used to pay down the existing debt to the federal government. Due to an increase in projected tax revenue, the state has an additional $210 million to apply to spend. The Senate wants to apply $100 million to the debt and have the remaining funds to go toward k-12 education. The House wants to apply at least $146 million which would remove federal interest penalties. A majority of House Republican Caucus members would like for the entire $210 million to be used toward the debt.

The issue remains in conference committee.

Comment are closed.