Nevada employers will feel pain of jobless fund debt

Nevada is borrowing heavily to pay jobless benefits, and employers will start seeing higher federal taxes to cover the debt, a legislative panel was told Thursday.

Nevada has had the nation's highest unemployment rate since May, and it set a record high of 14.5 percent in December. The state's unemployment insurance trust fund went broke in October 2009, and like many other states, Nevada has been borrowing from the federal government since then to pay benefits.

Cindy Jones, administrator for the Employment Security Division, said Nevada is on track to borrow $890 million by the end of 2011 and $1.08 billion by the end of 2012.

Interest on loans from the federal government is expected to cost $66 million in the upcoming biennium - money Gov. Brian Sandoval recommended be paid out of the state general fund.

Besides higher state taxes imposed this year to begin replenishing Nevada's trust fund, employers this year also will see the federal tax rate climb about $21, to a maximum $77 per employee, Jones said.

Similar increases are expected in each of the next two years, with the increase jumping to $175 in 2013. The increases would come on top of the existing $56 tax.

The debt is expected to be paid off in 2018, though that target depends largely on the speed of economic recovery, Jones said.

Officials at Nevada's Department of Employment, Training and Rehabilitation said Nevada continues to shed jobs but may be at "the end of the whip," as evidenced by a gradual stabilizing of the jobless rate.

In December, Jones increased the state rate paid by employers by an average $180 per employee to try to shore up Nevada's trust fund and slow the borrowing.

The state tax of 2 percent on the first $26,600 in employee wages increased the average annual tax to $532, up from $354.

More than 100,000 Nevadans continue to receive benefit checks each week, officials said.

Nevada's high unemployment has also lead to a spike in hiring discrimination claims, said Dennis Perea, deputy director of the employment department. Employers with a large hiring pool are more likely to pass over a pregnant or disabled candidate than employers with a small pool, he said.

Perea said the team that investigates discrimination complaints has an 11-month backlog and faces further staff reductions under the governor's budget proposal.

Sandoval has made job creation a priority of his administration. His budget proposal includes a new $10 million initiative called Silver State Works, a job training program designed to help retrain the unemployed.

"There's probably nothing more important this legislative session than getting people back to work," said Senate Majority Leader Steven Horsford, D-North Las Vegas.


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