With neither public nor member comment, the Employment Security Council on Monday voted to recommend keeping the unemployment insurance rate the same for calendar 2017.
The council headed by Paul Havas, voted unanimously to maintain the current 1.95 percent average rate for the more than 40,000 Nevada businesses under the system.
Employment Security Division Administrator Renee Olson told the council maintaining the rate would maintain stability for the state’s businesses while enabling the trust to recover.
Economist Dave Schmidt said the Trust Fund that pays benefits to those out of work has recovered faster than projected from the depths of the recession. At one point, the trust fund owed the federal government nearly $800 million despite having some $800 million in the fund when the downturn started in October 2007. The federal debt was paid back using bonds.
He and economist Alex Capello said that as of Monday morning, there was $664 million in the trust fund. They said that is $79 million more than was forecast a year ago and the highest trust fund balance since 2008.
“We are currently seeing very low levels of unemployment claims,” said Schmidt.
He said the most recent claims volume was just 2,500 compared to nearly 8,000 a week during the recession. In the last week of September, he said ESD paid out just $5.1 million.
“During the recession, we were paying out five times that amount,” he said.
But Capello said the most recent calculation is that the fund still needs to grow to protect the system from another major recession. He said that would require a total trust fund balance of $1.29 billion.
He said maintaining the existing state rate should enable the trust to grow to more than $950 million by the end of September 2017.
The insurance rate consists of several parts: There is the state portion that will remain 1.95 percent. On top of that, there is the 0.63 percent rate that is paying off the bonds purchased to pay the federal government back the $800 million borrowed in the recession and a small 0.05 percent that goes to a jobs program.
The bonds will be paid off by the end of 2017, enabling the council to lower the overall rate for 2018. But in 2017, the total average state rate to business will remain at 2.63 percent.
Then there is the federal tax: six-tenths of a percent of payroll on the first $7,000 in wages.
Businesses are charged anywhere from a quarter percent to 5.4 percent of employee pay based on each business’s worker turnover rate. Monday’s vote is the council’s recommendation to Olson, who will make the final decision and impose the rate at a Dec. 8 meeting.