W.Va. increases tax for jobless fund
By CARRA HIGGINS, Staff WriterUnemployment numbers have been climbing steadily throughout the state since the start of 2009. In April, lawmakers at the request of Gov. Joe Manchin passed legislation to increase the taxable base for unemployment to boost the money in its coffers. As more and more lose their jobs and tap into the depleting funds, state officials are looking for the added taxes to increase the benefit fund and prevent it from going broke.
For the first time since the legislation went into effect, businesses will be paying on the increased base. Due by July 31, the taxes will cover second quarter expenses and Workforce West Virginia has notified businesses registered with the agency about the changes, explained Unemployment Compensation Division Director Michael Moore.
Temporarily increasing the taxable base of a worker's salary to $12,000 is predicted to generate around $70 million for year, which will help the unemployment fund solvent during that time, Moore said.
When the unemployment fund reaches $220 million, the taxable base will decrease to $9,000. However, Moore does not foresee the pot reaching $220 million this year and added that unemployment rates are looking "pretty grim."
Prior to the bill becoming law in April, employers paid taxes on the first $8,000 of a worker's wages. Moore said the taxable base amount hasn't been increased since 1981 and that probably needed to go up anyway.
Surrounding states have a taxable base comparable to West Virginia's, but their unemployment funds are in the red and they had to turn to the federal government for help, Moore said. The legislation was designed to prevent a similar scenario in West Virginia that would result in paying back the federal dollars, plus interest.
At the end of May the unemployment benefits fund was at $186 million. In June unemployment compensation received $1.3 million in regular contributions from businesses and $40 million from the old worker's compensation fund. Transferring the $40 million from worker's compensation was part of the bill, Moore said. Unemployed workers were paid a total of approximately $33.2 million. Moore says it is too early to know exactly how much will be paid to out-of-work residents in July, but estimates compensation will be similar to June.
Delegate Bill Hartman, D-37th District, said the legislation is fiscally responsible. The state faced a similar problem with a depleting unemployment compensation fund more than 20 years ago, Hartman recalled. It was then the state turned to federal government for a loan to cover unemployment compensation. Now, the state does not need to add liabilities to pay off in the future, he said.
Having unemployment compensation is important, Hartman said, especially when some counties have unemployment figures in the double digits. He also cited the economic blow to the timber industry, which has affected Randolph and Pocahontas counties. According to May unemployment figures, Randolph has a 10.4 percent unemployment rate, while Pocahontas has 17.2 percent-the highest in the state - of its workforce without jobs.
Hartman is hopeful the economy turns in a positive direction soon and the fund reaches $220 million.
Moore notes that tax rates for businesses did not increase. Employers pay rates between 1.5 to 7.5 percent, which is based on turnover rates. The more unemployment claims a business files, the higher its percentage rate, Moore explained.
Employers with questions about the taxable base increase may call Workforce West Virginia' Contribution Accounting Department at 304-558-2674.
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audyhaze
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07-09-09 3:45 PM
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Jobless is not funny. Matter fact its terrible however would someone remind the assessor's office we are in a recession! Would someone agree with me that prices are going down "including land value". Would someone in a sane mind call or write this office and remind them that realestate is dropping and has dropped like a rock. Still the Randolph County assessor has raised tax's stating that its worth more and people are paying it. Bull Crap!! Its liken to the previous party who caused this recession. Like judge Judy says, "don't pee on my leg and call it rain"!!
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