PIERRE — The state panel that provides guidance on unemployment insurance taxes in South Dakota will meet Monday morning to consider recommending reductions in the tax rates starting in 2015.
The balance in South Dakota’s trust fund for unemployment insurance stood at about $63.5 million on Aug. 31 and is projected to reach the target of $76.1 million by the end of 2014.
Unless there is a significant downturn in the economy, the trust fund balance is forecast to reach $89.3 million by the end of 2015.
State Labor Secretary Pam Roberts said the system would be overfunded if that occurs.
Roberts, who will retire in mid-October, has asked the state Unemployment Insurance Advisory Council to look at UI tax-rate reductions that could be proposed to the Legislature for action in January.
The panel looked at four sets of recommendations during a meeting Tuesday and will gather again Monday to consider another proposal.
The internal debate among members of the panel is whether all contributors to the system should be treated somewhat equally by a package of reductions or those users who don’t draw on the system very often or not at all should receive larger reductions.
The seasonal nature of the construction industry tends to make it the largest user of the system. Many construction businesses see their laid-off employees draw more benefits from the system than those employers pay into the system.
The lowest users of the system tend to be retail businesses. All businesses were hit with surcharges in recent years during the depth of the recession, because the system had gone broke and required a federal loan, similar to many states across the nation.
The latest proposal was circulated Thursday by Roberts’ department.
It would keep the standard range of tax rates in place, but would reduce by one-third the penalty paid by negative users and reduce across the board the amounts per employee that all businesses would need to have in reserve in the system.
The plan appears to be a milder version of the proposal submitted by the Associated General Contractors group. AGC’s original plan would have somewhat reduced the system’s reserves rather than allowing for minor growth.
The new proposal blends a piece of the AGC proposal and a piece of an earlier proposal from Roberts’ staff.
Businesses won’t have much time before the Monday meeting to analyze any of the original four proposals or the latest one. The meeting is probably the last for the council before the legislative session begins in January.
The council’s decision, if there is one Monday, might be based more on philosophy than detailed dollars-and-cents forecasts.
“It’s so individual that it’s a difficult thing to explain to employers until they get the bill,” Roberts told the council Tuesday.
The meeting will start at 10:30 a.m. CDT at the Kneip building in Conference Room 3. The meeting also will be conducted via video-conference using studios in Aberdeen (DOL building, 420 S. Roosevelt St.); Rapid City (DOL building, 2330 N. Maple Ave. Suite 1); Sioux Falls (Dept. of Human Services building, 811 E. 10th St.); and Watertown (location yet to be determined as of Thursday afternoon).
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