Removal of unemployment insurance surcharge to save businesses $34 million annually
After many years of Kentucky businesses paying a surcharge on unemployment insurance (UI), Gov. Matt Bevin announced Thursday that the surcharge will be suspended effective immediately.
The state’s approximately 91,000 employers have been paying a surcharge assessment of 0.21 percent of their taxable wage base of $10,200 per employee since January 2014 to pay off a $972 million federal loan needed to meet UI benefit obligations.
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 Kentucky Chamber President and CEO Dave 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.
In a press release from the governor’s office Thursday, it was stated that cabinet officials estimate that the removal of the UI surcharge will save Kentucky companies as much as $34.2 million annually.
“Today is a great day for all employers in the Commonwealth,” said Gov. Bevin. “We have now retired the last of the unemployment debt and we are delighted to remove this additional tax burden from the backs of Kentucky’s job creators. This successful result was made possible by the collaborative efforts of the former administration, members of organized labor and the business community all working together to address this problem.”