New state law averts big spike in unemployment taxes on businesses

By Jerry Cornfield and Rachel Riley

Gov. Jay Inslee signed into law Monday legislation that cancels most of a massive hike in unemployment insurance taxes on businesses this year and increasing the amount of weekly benefit checks to unemployed workers starting this summer.

“We know this pandemic has caused sweeping economic hardship for workers and businesses, and this bill is a big step forward to softening those impacts,” Inslee said before signing Senate Bill 5061.

Businesses will face a small rise in premiums this year, with future increases spread over five years, avoiding a huge spike resulting from an unprecedented number of people who have claimed benefits during the pandemic.

The new law also expands who’s eligible for unemployment assistance and increases the minimum weekly benefit amount. For the lowest-paid workers, it means those weekly checks will rise to $268, up from $201. The change is for new claims filed on or after July 1.

“It is a pretty big step,” said Rep. Mike Sells, D-Everett, chairman of the House Labor and Workplace Standards Committee, who shepherded the bill through the House.

It provides roughly $1.7 billion in short-term tax relief for the private sector so businesses “can try to have a comeback” and around $1.2 billion in future assistance to lower wage jobless workers, Sells said.

Plus, the new law gets a conversation going on how to retool the state unemployment system to respond more nimbly to this and future emergencies, he said.

In January, businesses across the state received first-quarter unemployment tax billings showing colossal increases, driven upward by the record-setting number of workers who lost their jobs as Inslee shuttered the economy in response to COVID-19.

Absent changes, the average unemployment tax amount that businesses pay per employee was expected to increase from $352 last year to $583 in 2021 and $875 in 2022.

The new law will drastically reduce this year’s premium increase, resulting in employers paying an average of $362 per employee. That average would then climb to $586 in 2022, though lawmakers are continuing to discuss ways to avert even that sizable increase.

Edmonds restaurant owner Shubert Ho called the legislation “a step in the right direction.” But the hospitality industry, reeling from the pandemic, will still have to pay much of the cost to replenish the state’s unemployment insurance fund.

“I think that the state needs to figure out a way to find that money elsewhere,” said Shubert, part owner of FeedMe Hospitality, which includes eateries such as Salt & Iron and Bar Dojo.

“For us to still pay the bill for something like this is not in the best interest of allowing prosperity to return to the hospitality industry,” he said.

State Sen. Karen Keiser, D-Des Moines, chairwoman of the Senate Labor, Commerce and Tribal Affairs Committee, said the legislation addresses the “immediate crisis” faced by businesses while building a “solid bridge to the future” for replenishing the state’s once bountiful unemployment insurance trust fund.

“We have a lot to do, but this is a good step forward,” she said.

Senate Bill 5061 enjoyed broad bipartisan support, passing by margins of 42-7 in the Senate and 89-8 in the House.

It is the first of several pandemic relief bills the Legislature is sending Inslee to sign.

A $2.2 billion COVID-relief package could reach the governor this week. It cleared the House on Feb. 1 and is expected to be approved by the Senate on Wednesday, Feb. 10.

Also Wednesday, a bill exempting businesses from having to pay taxes on grants or funds they received as assistance in response to the pandemic is slated for a final vote.

Reporter Rachel Riley contributed to this story.

Reporter Jerry Cornfield: jcornfield@heraldnet.com | @dospueblos