Unemployment tax bill passes House; Senate fast-tracks it

The Hawaii House of Representatives on Feb.18 passed legislation that would cut employers a break from an anticipated surge in their unemployment taxes beginning in April. House Bill 2169 would ease the unemployment tax burden on Hawaii employers, who have been enjoying a payroll tax holiday for the past two years only to see the recession cause an unanticipated surge in the jobless rolls.

Both the Senate Labor and Ways and Means committees heard the bill and recommended it be passed unamended after a Feb. 26 hearing. The fast-tracked measure proposes a gradual resetting of payroll taxes, the only source of replenishment for the state’s dwindling unemployment fund, which currently has $78 million left and is expected to hit zero by September, which will trigger borrowing from the federal government without bankrupting businesses or causing more layoffs.

The bill establishes new employer contribution rates for unemployment insurance. It would set the wage base at 90 percent of the average annual wage for 2010 and 2011. It also would retain the maximum weekly benefit rate at 75 percent of the average weekly wage until Dec. 31, 2011, for people collecting unemployment checks. That rate would then return to 70 percent on Jan. 1, 2012.

If the current law goes unchanged, employers could see payroll taxes jump from the current $90 per employee, per year to as much as $1,070 per employee, per year. Most employers could expect to pay between $200 and $600.