As recession grips Nevada, panel to consider funding jobless claims

Nev. panel to consider tax to fund jobless claims

CARSON CITY, Nev. — The state Employment Security Council will weigh Nevada’s dismal economy against rising debt to pay jobless claims when it considers how much employers should pay into Nevada’s unemployment trust fund.

The council last year recommended leaving the rate unchanged — about 1.33 percent on the first $27,000 in wages — as the recession gripped Nevada’s economy. It meets Tuesday in Carson City to consider the rate for next year.

But the state’s trust fund is broke, and with the highest unemployment rate in the nation, Nevada has been relying on money borrowed from the federal government to pay benefits — money it will eventually have to pay back, possibly with interest.

The federal stimulus bill provided states with interest-free loans for unemployment claims through 2010. After that, the law provides for an interest rate of 4.6 percent on any outstanding balances.

So far the state has borrowed $450 million, Mae Worthy, spokeswoman for the Nevada Department of Employment, Training and Rehabilitation, said Monday. Officials project that sum could go as high as $1 billion by the end of the year.

The rate employers pay to the unemployment fund is adjusted annually. The council will hear testimony on the state’s economy and make a recommendation to Cynthia Jones, agency administrator, who will then hold a series of public hearings before making a rate decision later this year.

Nevada’s unemployment rate hit a record 14.2 percent in June, the highest in the nation, with more than 193,000 Nevadans out of work.

Elliott Parker, an economist at the University of Nevada, Reno, said Monday he didn’t think raising the unemployment tax rate would hinder job creation, because Nevada’s rate is already low.

“We’re going to have to pay it back one way or another,” he said of the borrowed funds.

Gov. Jim Gibbons, who last year wanted the jobless tax to be reduced, will not make a recommendation this time, spokesman Dan Burns said. Gibbons lost the Republican primary in June and will be out of office at the end of December.