Despite Gov. Jim Gibbons' call to lower unemployment insurance rates to give business a break, the Employment Security Council voted unanimously Tuesday to recommend keeping those rates at the same level for the coming year.
The recommendation to maintain this year's 1.33 percent overall rate was supported by not only the Reno/Sparks and Las Vegas chambers of commerce and several other business groups but the AFL-CIO's Danny Thompson.
Gibbons had recommended cutting the overall rate paid by businesses in Nevada to 1 percent, which would generate an estimated $236.5 million in 2010. But the council was warned that with state unemployment at 13.2 percent, Nevada's trust fund will be empty in two weeks.
The state will borrow more than $250 million from the federal government just to pay unemployment benefits through the rest of this year and probably more than $700 million to get through 2010.
According to Employment Security Administrator Cindy Jones, she expects total federal loans to reach about
$1 billion by the end of 2010.
All of that money, the council headed by Paul Havas was told, must be paid back either out of the state General Fund or a special assessment on businesses.
Maintaining the 1.33 percent rate is expected to generate about $313.65 million next year.
If the state doesn't start paying off its loans after a year, the government imposes an added per employee assessment on businesses to do so and the state has no say in that amount.
Ray Bacon of the Nevada Manufacturing Association said after the meeting that businesses were concerned lowering the rate now would cost them more in the long run since after the end of 2010, the state will have to pay back the loans with interest.
Tray Abney of the Reno/Sparks Chamber of Commerce told the council that group's 1,500 members "urge the council to maintain the tax rate for now."
He and Las Vegas chamber officials said normally they wouldn't support borrowing to maintain a program like this but that this recession is unique since it is expected to continue at least through 2010 and probably beyond.
"We would love to say lower the rate," said Bacon. "We know that's not realistic."
Thompson, representing more than 100 Southern Nevada unions including the building trades, said lowering the rates "would be a huge mistake" since the more the state borrows, the more it will eventually have to pay back.
The rate isn't a flat 1.33 percent on all Nevada businesses. Eighteen different rates are imposed based on employee turnover in individual businesses. Rates range from 0.25 percent for those with the best history of keeping workers to 5.4 percent for those with the highest turnover.
Because the rates charged are based on turnover experience, Bacon said many Nevada businesses will see an increase this coming year despite the council vote because they have had to make layoffs.
The council's vote was unanimous but it's only a recommendation to Jones. She said barring a drastic event between now and December 7 when she certifies the 2010 rates, she normally implements the council's recommendations.
"Typically I go with the recommendation of the council which has come with the input of the business community," she said. "The desire of the business community is to keep rates the same."