Gov. Steve Sisolak on Wednesday issued a press release saying the state will not adopt the Employment Security Council’s recent recommendation of an unemployment tax rate increase in 2022 to recover from the pandemic. That tax funds the Trust Fund that pays unemployment benefits to workers. “The announcement comes, after considerable analysis, conversation and discussion between the governor’s office, the Nevada Department of Employment, Training and Rehabilitation and the Nevada business community,” the release said. This is the first time in memory a governor has become involved in this process. In early October, the Employment Security Council voted to recommend raising the overall average rate from 1.65 percent of the first $36,000 in wages paid to each Nevada worker to 2 percent. The 2 percent would generate an estimated $675 million in 2022. Of note, while the proposed increase would have been one-third a percent higher than the current tax level, it's significantly lower than the 2.65 percent businesses had to pay during the Great Recession.
The rate is an average spread over 18 categories of businesses rated according to how much UI benefits their workers use. The rate is 5.4 percent for businesses whose workers use the most UI benefits, and all the way down to a quarter percent for those with the best records. “I’ve done everything I can to support Nevada’s businesses, and this is one more step toward recovery from the ongoing effects of the pandemic. Since 2019, the Average Tax Rate has declined to its lowest level in more than a decade, and we intend to keep it low,” Sisolak said in a Wednesday statement. “I appreciate the hard work of the Employment Security Council and the Employment Security Division Administrator to hear from all the stakeholders and come to a conclusion that protects Nevada’s businesses in this critical moment.” The reason for the proposed increase was the need to rebuild the UI Trust Fund that pays unemployment benefits to Nevada workers. That fund was emptied by the huge number of benefit claims resulting from the economic shutdown and layoffs of thousands of Nevada workers because of the pandemic. Nevada ended up borrowing more than $300 million from the federal government once the Trust Fund was depleted. That was paid off using federal pandemic relief funds. According to past reports, a majority of Employment Security Council members at the early October meeting agreed with member Mark Costa that unless the rate increased, it would take three-plus years to replenish the Trust Fund ahead of a future economic downturn. At the time, Council Chairman Jeff Frischmann pointed out not having to pay back the $332 million borrowed was a huge benefit to employers. Council recommendations are normally adopted with little fanfare by the administrator of the Employment Security Division. According to Sisolak’s Nov. 10 statement, Employment Security Division Administrator Lynda Parven “will put forth a regulation that holds the 1.65 percent average tax rate steady for 2022.” The regulation will go before the Council on Dec. 18.