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Louisiana Senate passes legislation to avoid raising employer taxes, cutting unemployment benefits

Three measures meant to hold employer taxes and worker benefits steady despite the state’s empty unemployment trust fund were approved Wednesday by the Louisiana Senate.

Before the COVID-19 pandemic, the state fund that pays for unemployment benefits had a balance of more than $1 billion. The fund has been tapped out, however, by the unprecedented demand during the pandemic, forcing the state to borrow from the federal government to pay legally mandated benefits.

When the fund balance falls, state law calls for more taxes on employers and reduced benefits for unemployed workers to shore up the fund. The Senate voted for three measures that, taken together, put that process on hold.

Senate Concurrent Resolution 3 calls for suspending the requirement that the state’s Revenue Estimating Conference certify the fund’s balance in September. SCR 5 would suspend imposition of a “solvency tax” that normally kicks in when the balance dips below $100 million. That tax could have cost employers collectively more than $60 million, according to a Legislative Fiscal Office estimate.

Senate Bill 89 keeps the maximum weekly worker benefit and the amount of each employer’s wage base that is taxable the same as they are currently. Lawmakers last year froze benefits and taxes at the level at which the law normally calls for when the fund is between $750 million and $1.15 billion.

Lawmakers plan to use some of the state’s share of the federal American Rescue Plan stimulus, though an exact figure has not been determined. Louisiana officials expect to receive about $3.2 billion for state government.

Gov. John Bel Edwards has said paying off the debt the state will owe to the federal government to pay current benefits probably will cost about $200 million, plus about $400 million to shore up the fund’s balance, for a total of around $600 million the first year ARP funds are available. By the end of year two, Edwards would like to see the fund back above $750 million. The exact cost will depend on how much the state has to borrow and how much is collected in employer taxes.

This article was originally posted on Louisiana Senate passes legislation to avoid raising employer taxes, cutting unemployment benefits

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