A bill that would keep North Carolina’s unemployment tax rate lower than prescribed in 2022 is on Gov. Roy Cooper’s desk.
Unemployment tax collections support the state’s unemployment trust fund, which is used to compensate unemployed workers in the state. Senate Bill 311 freezes the tax rate at 1.9% in 2022, reducing the tax burden on employers.
“North Carolina is the best place in the country to start a business because of low-tax, low-spending Republican policies,” said one of the bill’s sponsors, Sen. Kevin Corbin, R-Macon. “This bill to maintain the current low unemployment insurance tax rate is yet another example of the pro-business, pro-economy Republican philosophy.”
The unemployment tax rate is determined by the trust fund’s balance. The base rate for the new year depends on the size of the state’s trust fund balance on Sept. 1. Under the current formula, the base rate for 2022 is scheduled to increase by 2.4%.
According to legislation, when the unemployment trust fund balance as a percentage of total insured wages is greater than 1.25%, the rate is 1.9%. When the balance is equal to or below 1.25% and greater than 1%, the base rate is 2.4%, and when it is equal to or below 1%, the base rate is 2.9%.
The state’s unemployment trust balance is $2.9 billion, but it fell when unemployment was at it’s peak during the first year of the COVID-19 pandemic.
After the onset of the COVID-19 pandemic in April 2020, the state’s unemployment rate skyrocketed to 13.3%. The unemployment rate was 3.6% in February 2020 before the pandemic. The North Carolina Department of Commerce has paid out more than $2 billion in state unemployment benefits since March 2020.
SB 311 also would update the funding grant model for volunteer fire departments. It would allow the board of trustees for the Local Governmental Employees’ Retirement System to give its members a one-time pension supplement.
The bill unanimously cleared the House, 111-0, and Senate, 46-0, last week.
This article was originally posted on Bill to freeze unemployment tax rate on Cooper’s desk