State Capitol News
9:13 am
Tue April 26, 2011

Brewer Signs Legislation to Hike Unemployment Taxes

Phoenix, AZ – The state's unemployment trust fund is supposed to be self supporting. But the recession has been longer and deeper than anyone expected. And last year the fund went broke. Those out of work continued to get their benefits because the state borrowed the money from the federal government, up to $600 million at one point. The debt is still more than $330 million. Right now the state is paying it back at 4 percent interest. But there isn't enough coming in from unemployment taxes to get the debt paid off by the end of 2012. And that that point, the feds can assess Arizona employers immediately for anything not yet paid. Marc Osborn who lobbies for the Arizona Chamber of Commerce said the is was simple: Pay a little bit more over the next year and a half to get that debt paid off, or pay what could be a lot more later, all at once.

(That's a much cheaper solution than waiting for the feds to impose a much more draconian penalty on Arizona businesses. So this is the most cost-effective option for Arizona businesses: Repay the debt and get our trust fund healthy for the long term.)

Firms now pay unemployment insurance based on how often they fire workers, with premiums ranging from less than $2 per worker per year to more than $375. This new law will add $28 a year per worker for the balance of this year and $42 for next year, with all the new proceeds earmarked for getting the federal government paid off. For Arizona Public Radio this is Howard Fischer.