Oroho: UI tax rate bill needs to be revenue-neutral

TRENTON – One of the sponsors of a bill dealing with unemployment insurance tax rates that was held from committee today said they want to work to make sure the bill treats employers fairly.

Steven Oroho, (R-24), Sparta, said regarding S1121 that “we want to try to make it revenue-neutral.’’

The bill, which would modify the “experience rating provisions” of the unemployment insurance law that is used to set employer tax rates,  was held from consideration before the Senate Budget Committee so that sponsors could work on it with the governor’s office.

Oroho said after the committee hearing today that the concern in regards to the whole situation is that you have companies that do a decent job of keeping people employed and they are in effect helping to subsidize companies that are not doing such a good job of retaining workers.

As originally written, the bill would add a series of tax rates for employers who have lower reserve ratios for experience-rating years.

The last thing they want is a bill that essentially is another tax increase on employers, he said. 

The Office of Legislative Services estimated that the bill would result in approximately $26.81 million in additional revenue for the UI trust fund in fiscal year 2013, $27.61 million in fiscal year 2014 and $28.44 million in fiscal year 2015.

Under current law, the highest UI tax rate imposed on any employer is 7 percent, which applies to any employer with an “Employer Reserve Ratio” of negative 35 percent or lower, OLS stated.  The lack of appropriate contribution rates for employers with much more negative reserve ratios effectively causes employers with positive reserve ratios to subsidize the employers with highly negative reserve ratios, OLS stated.

Earlier story:

UI rates bill held from consideration

 

Oroho: UI tax rate bill needs to be revenue-neutral