With the help of the Kentucky Chamber of Commerce, Kentucky’s Unemployment Insurance (UI) Trust Fund has a positive balance which will lead to savings for businesses of $105 per employee. Gov. Steve Beshear made this announcement Monday alongside Chamber President and CEO Dave Adkisson and legislative leaders.
The announcement comes as the Commonwealth has achieved an early payoff of the $972 million federal loan needed to meet UI benefit obligations, putting the plan on its way to solvency.
The early payoff is exciting news for the business community as maintaining the fund’s positive balance ensures Kentucky employers will save approximately $165 million in federal UI taxes when they file in January 2016.
At the press conference about the early payoff Monday, Adkisson discussed the impact of the news on Kentucky businesses.
“This is a big deal. Saving $165 million or $105 per employee will affect, in a positive way, virtually every employer in the state of Kentucky. And it was done with a bipartisan effort,” Adkisson said.
In 2009, Kentucky owed nearly one billion to the federal government for unemployment insurance because benefits had been increased and funding was insufficient for those benefit levels. The 2008 recession exacerbated the problems and employers in Kentucky were facing massive federal taxes if the situation wasn’t addressed.
In response to the issue, Governor Beshear created a task force with legislators, business representatives which included Adkisson, and officials from organized labor to hash out a plan to address the problem which led to the passage of House Bill 5 in the 2010 special session – a victory that has led us to this result.
The state faced another expensive tax mandate in 2011, because there was no specific mechanism to pay the federal interest on the debt. Again, the Chamber worked with legislators on both sides of the aisle and other business groups to craft legislation in the 2012 session to avert another disastrous federal business tax of more than $600 million.
Adkisson thanked Sen. David Givens and Rep. Larry Clark at the announcement Monday for their leadership in negotiating this deal, which resulted in the passage of HB 495 in 2012.
Hear remarks from Adkisson, Beshear and other in the video below: