Kentucky businesses avoid costly tax increase with unemployment trust holding steady
11/21/2014 03:38 PM
The state has qualified for a waiver under the Federal Unemployment Tax Act after taking not actions that negatively impacted the solvency of the Unemployment Insurance Trust Fund, saving Kentucky businesses an estimated $112 million in the current tax year, Gov. Steve Beshear announced Friday.
Kentucky received nearly $1 billion in loans from the federal government to shore up the unemployment fund, which had been depleted in the wake of the national recession, in 2009, and the state has made “significant strides” in paying off the loans, according to a news release.
The General Assembly passed legislation in 2012 to replenish the fund through surcharges levied on businesses, which saved about $63 per employee with the federal tax waiver. The waiver spares businesses from a 0.9 percent increase on the taxable wage base, according to the release.
Kentucky began this year with a $639.8 million balance and owed $336.2 million as of Monday, the release stated.
“I’m pleased Kentucky is in a position to qualify for the federal tax waiver that will bring needed relief to our employers,” Beshear said in a statement. “We have made substantial progress toward repaying the loan and ensuring the long-term stability of the UI Trust Fund, and we must stay the course until Kentucky has a healthy reserve for future downturns.”
House Speaker Greg Stumbo, D-Prestonsburg, called the 2012 bill “one of the state’s top accomplishments over the last five years.”
“I am certainly happy with this latest news,” he said in a statement. “It will be a great day when we pay off this federal loan.”
Senate President Robert Stivers, R-Manchester, said the state “must remain focused on a jobs-friendly business climate,” which is aided by unemployment insurance rates. He credited Sen. David Givens, R-Greensburg, with leading the legislation sponsored by House Speaker Pro Tem Larry Clark of Louisville through the Senate.
“Overall, this was a great bipartisan, bicameral effort, with the governor also lending significant support,” Stivers said in a statement. “The waiver helps the commonwealth reach its goal of retiring the debt, and the end result is lower unemployment taxes for all employers in Kentucky.”
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