Is your state's unemployment fund insolvent? nearing?

[MrsCat 6]

Massive Hawaii business tax increase coming soon

HONOLULU—Hawaii businesses will have to pay an average of about $1,000 more per employee in annual taxes come April to help keep unemployment payments flowing to laid-off workers.

The rising number of unemployed is sapping the state's savings fund at a rate of $32 million a month, triggering the drastic tax increase called for by law.

Businesses currently pay an average of $90 per employee each year into the unemployment fund, but that figure is expected to rise to an average of $1,040 by next spring.

. . . . . .

Hawaii pays some of the most generous jobless benefits in that nation, giving the unemployed up to $545 per week. Unemployment benefits last just more than a year -- 59 weeks -- before they expire.

Those benefits are not at risk, even though the state's unemployment fund is projected to be depleted by the end of next year. When that happens, Hawaii government leaders plan to seek a loan of some $61 million from the federal government.

"They print money, right?" said Darwin Ching, director for the state Department of Labor and Industrial Relations. "We'll be insolvent, but we won't be bankrupt."

. . . . . .

There is about $244 million left in the state Unemployment Insurance Trust Fund, down from an all-time high balance of $552 million in 2007. Estimates show that figure will drop below zero in the fourth quarter of the 2010 calendar year.

Along with the poor economy, another reason for the rapid depletion of the unemployment fund is the law lowering the unemployment taxes businesses pay in. That law was passed in 2007, when the trust fund was healthy and businesses sought tax relief. But it also called for the tax hikes if the unemployment fund ever got low.

"Because the unemployment rate has gone up so high recently, we're burning through money way faster than we're taking it in," said Rep. Karl Rhoads, D-Kakaako-Downtown, chairman of the Labor Committee. "The unemployment fund has to be rebuilt. There's no getting around that. The unemployment payments are what's keeping people afloat."

. . . . . .

Some business owners even say they may have to lay off workers to pay for the increased costs.

With the higher taxes, federal loan and improving economy next year, the unemployment fund would go back into the black during the second quarter of 2011. The federal government doesn't charge interest on these types of loans if they're paid back within a year.

Hawaii surveyed other states to find out how many of their unemployment savings were in trouble. Of the 20 states that replied, the funds of 14 states were already insolvent in July, and four more expected to be insolvent by the end of 2009.

http://www.boston.com/business/taxes/artic...se_coming_soon/

[Ling Ling 22]

59 weeks of bennies???

$545 bucks a week???

Hawaii??????????

That's nearly $29K for the year....and lot's of good surfing.

...and they're surprised that they're running out of money?

[Ban Hammer 13,332]

brilliant idea, tax the employers more when unemployment is high!

Edited September 19, 2009 by charles!

[rebeccajo 14]

59 weeks of bennies???

$545 bucks a week???

Hawaii??????????

That's nearly $29K for the year....and lot's of good surfing.

...and they're surprised that they're running out of money?

Seriously. That's very very high.

[Trompe le Monde 1,107]

So is cost of living in Hawaii.

Unemployment is $450 a week in California......you certainly won't be living the high life on that here, however. Typical rents for a 1 bedroom apartment are over $1000/month.

[rebeccajo 14]

brilliant idea, tax the employers more when unemployment is high!

It is brilliant, actually.

You'll notice the article says 'average'. UI premiums to the employer are based upon rate of usage. In other words, the more people you let go, the higher your premium will be. If you keep your staff on, your premiums stay low.

Some companies legitimately cannot afford to keep people on in hard times. Many others arbitrarily let staff go and call them back later. Others fire higher paid staff so they can bring in workers for a lower wage. Companies with those type of employment practices SHOULD pay a higher rate.

[MrsCat 6]

brilliant idea, tax the employers more when unemployment is high!

Some companies legitimately cannot afford to keep people on in hard times. Many others arbitrarily let staff go and call them back later. Others fire higher paid staff so they can bring in workers for a lower wage. Companies with those type of employment practices SHOULD pay a higher rate.

And that is exactly what a lot of the large employers have been doing. Tourism is low (on this island) and many others. So the large hotel/resorts are putting everyone on "partial" unemployment, cutting their hours and letting the highest paid staff go. Usually trying to suggest that they were fired with cause for some really small and silly infractions. That way their account isn't charged.

But, the small employers are going to get hurt too in April. A lot of them have had to let staff go because of the economy, and are barely surviving. I sit next to our tax auditor for UI and her voicemail was full yesterday of her accounts calling to see what their next year's premium is going to be and where they're going to find the $$ to stay afloat.

I am curious how other people's states are doing. They list like 14 others funds going broke, but don't list which ones.

[spookyturtle 9,465]

It says up to $545. That would be for someone who was making 50K+ per year. If it's anything like it is in MA, you can collect approx half of your gross, up to a maximum. If you made 100k per year, the max you could collect would be 545. I wouldn't consider it a free ride living on half of your prior salary. As far as I know, the banks don't cut your morgage payments in half or your landlord won't lower your rent.

This shows how bad things really are.

[Trompe le Monde 1,107]

Exactly - unemployment is for people who have paid in and deserve a break if things go wrong

[MrsCat 6]

It says up to $545. That would be for someone who was making 50K+ per year. If it's anything like it is in MA, you can collect approx half of your gross, up to a maximum. If you made 100k per year, the max you could collect would be 545. I wouldn't consider it a free ride living on half of your prior salary. As far as I know, the banks don't cut your morgage payments in half or your landlord won't lower your rent.

This shows how bad things really are.

Not in HI - while there are a many high wage earners who $545/wk is a huge salary cut, many on UI get just about the same that they were making prior to. Most wages are ####### in HI, that's why people work 2-3 jobs. So if you were making $36,000/yr and worked for 12-15 months prior to getting laid off, you'd likely qualify for the max. Essentially taking home the same amount you were when you had a job after deductions.

The article makes it seem like UI benefits in HI are for 59 weeks. But actually by law they are for 26 weeks. There have been two extensions one for 13 weeks and one for 20 weeks. So people who had an original claim, could have their benefits extended to 59 weeks. I presume most other states have also got these extensions? We're waiting to hear whether there will be #3 coming along anytime now. . . . . .

Sounds harsh, but at some point these people will have to go onto welfare, cause UI is costing a lot of money.

[spookyturtle 9,465]

In MA with the federal extensions and all you can collect for up to 79 weeks. Part of this kicks in if your state unemployment rate is above the national rate.

http://www.mass.gov/?pageID=elwdterminal&a...w&csid=Elwd

[MrsCat 6]

In MA with the federal extensions and all you can collect for up to 79 weeks. Part of this kicks in if your state unemployment rate is above the national rate.

http://www.mass.gov/?pageID=elwdterminal&a...w&csid=Elwd

Things must be really bad there.

[Dr. Obvious 49]

Is your state's unemployment fund insolvent? nearing?

Yes.

http://www.courierpress.com/news/2009/sep/...d-hole-deepens/