Even though a weakening economy will drain Nevada's unemployment insurance trust fund, the state decided last week to keep the basic tax rate paid by employers at 1.3 percent of payrolls.
Dave Schmidt, an economist for the Nevada Department of Employment, Training and Rehabilitation, forecasts that the unemployment insurance trust fund will decline to $492.1 million at the end of 2009, down $251.1 million from the end of this year.
The year-end figure for next year also is more than $77 million below the target established by the state to keep the unemployment trust fund solvent.
But Cindy Jones, administrator of the state's employment security division, said state officials think prevention of additional burdens on hard-pressed employers is more important than keeping the trust fund at the minimum recommended level.
She noted, too, that the state built up the fund's reserves during good years to provide some flexibility when the economy weakens.
"We are not experiencing the problems other states are seeing. Our trust fund is in much better shape than many other states," Jones said. "We remain cautiously optimistic."
Schmidt said the unemployment fund faces a double hit during a recession.
On one hand, tax receipts decline because fewer people are working. At the same time, the number of claims for unemployment benefits rise sharply.
Nevada employers will pay unemployment tax on the first $25,400 of earnings by each of their employees next year. The new rates take effect Jan. 1.
Jones said about 33,000 employers in the state 53 percent of the total are eligible for experience
rating on their unemployment tax rate.
Nearly half of the companies who have good experience records qualify for the lowest unemployment tax rate 0.25 percent.
The state employment department currently is mailing about 40,000 checks a week to jobless persons and
is receiving about 48,000 claims a week. The state's unemployment rate, 7.3 percent, is the highest in 23 years.
