Show Unemployment tax will Increase for most Utah employers in 76 j Unless some action Is taken I I t by the forthcoming Budget g Session of the Utah Legislature experience rating in Utah will wll willbe be be eliminated and all employers employers employers em em- in the state stale will be forced to pay the maximum 27 percent unemployment Insurance in insurance In In- tax rate rale beginning in 1976 For many employers this will will mean a 93 percent increase yin Hn in their state unemployment tax bill next year regardless of j aj their own employment ex- ex t I tj j THESE FACTS were reported today by Utah Foundation the private tax taxa a research organization in their analysis of the unemployment insurance problem facing the sta state te According to the Foundation study the unemployment tax schedule is determined by the thee e ratio of the unemployment reserve fund balance to the total wages paid by all covered employers in the state Recently there has been a drain drainon on the reserves because of the high rate of unemployment resulting from the recession Total wages in the state also have been rising during this same period because of in in- in AS A result the critical reserve fund ra ratio tio is expected to drop below 14 percent by the end of the year which automatically will trigger a suspension of experience rating in Utah a and d require all employers em Em- in the state to pay the maximum 27 percent r rate rate te For employers with the best employment employment employment em em- experience now now paying a 14 percent rate this will mean a 93 percent boost in unemployment taxes next year October 20 1975 the Utah Advisory Council consisting of representatives of business labor Jabor and the general public approved v a a. plan d designed J to retain and stabilize t Wah h m co compensation program In essence th the council plan would raise the taxable wage base from the present to in 1976 and make adjustments in subsequent years in line with changes in the average wage paid to all covered workers in inthe inthe inthe the state In addition the proposal would change the reserve fund ratios for determining determining determining deter deter- mining the tax rate schedule to tobe tobe tobe be applied and also raise the maximum rate from the present 27 percent to 30 per per- cent FOUNDATION TION analysts point out that total projected tax increases for all employers in 1976 would be about the same under the Advisory Council play playas as would occur if no change were made in the present law lawand lawand lawand and the tax rate for all employers employers employers em em- was allowed to climb to 27 percent The council plan however would continue experience rating which provides lower rates for employers with stable employment experience In addition the council proposal is designed to strengthen the reserve fund thereby maintaining maintaining maintaining main main- range long-range fiscal solvency of the unemployment program Effect of the changes proposed by the Advisory Council on specific employing firms will vary according to the firms firm's wage level and employment employment em em- experience In general costs costs costs' would rise especially for wage high employers employers employers em em- but the principle of experience idling would be retained WHILE UTAH has encountered encountered en en- countered counter d some problems this year in financing its unemployment unemployment unemployment compensation program the situation here is not nearly as critical as it is Inmost Inmost in inmost most of the other states The Foundation report indicates that a growing number of sta states tes are borrowing from the Federal Government in order to meet current unemployment benefit payments At the present time 13 of the states have depleted their reserves and it is estimated that as many as 30 state unemployment insurance systems systems' may be broke by the end nd of 1976 if present trends continue By contrast the Utah system still has adequate reserves to meet current benefit costs Even if no change were to be made in the present law the Utah system could continue to operate for another five to 13 years before the Reserve Fund would be exhausted t of |