Ohio’s unemployment system remains insolvent and the
state will continue to owe interest payments to the federal government until
the nearly $770 million in loans is repaid. Since the last recession Ohio is one of three
remaining states with an outstanding balance owed to the federal
government. As a result of ongoing
borrowing, in 2016, employers in Ohio will experience another loss of FUTA tax offsets
resulting in a total tax increase of $126 per employee over the base rate as a
result of our years of borrowing with an on-going outstanding balance.
While repaying the loan remains a top priority for
NFIB/Ohio, so too should creating a long-term solvency plan. Simply paying off the loan does not address
the systemic issues that plague Ohio’s unemployment compensation system. Short of creating such a plan, if/when the
next economic downturn occurs, Ohio is likely to find itself in the same
position we are today, borrowing from the federal government.
Ohio does have a relatively low taxable wage base when
viewing the country as a whole.
However, simply trying to
create solvency on the backs of small business is not good public policy. Representative Barbara Sears, a fellow NFIB
member, is the sponsor of House Bill 394, legislation that would help in overhauling
Ohio’s insolvent unemployment compensation system. The bill aims to bring about sensible reforms
that will put Ohio on a path to long-term solvency.
House Bill 394 offers the following reforms:
- Reduces the number of weeks of unemployment compensation
eligibility based upon the state unemployment rate from a minimum of 12 weeks
to a maximum of 20 weeks
- Eliminates the dependency provision which increases
benefits (Ohio is one of only 14 states with such a provision).
- Temporarily freezes indexing of benefits until such time
as Ohio reaches a minimum safe level in the unemployment compensation trust
fund where the benefit amount will return to the current inflation adjusted
- Temporarily adjusts Ohio’s taxable wage base from the
first $9,000 to $11,000, again until the minimum safe level is achieved, at
which point it reverts back to the lower amount.
- In addition to benefit and wage base adjustments, it
clarifies administrative functions and processes at the Ohio Department of Job
and Family Services for granting or denial of benefits by codifying case law.
The current system is one that will continue to create
insolvency which is severely exacerbated when we face economic downturns. This
balanced approach will set Ohio on the path toward long-term solvency, helping
our state better prepare for the next recession. Ohio has not undertaken a major reform bill
on unemployment compensation in decades.
If you have any questions related to Ohio’s unemployment
compensation reform, please contact Chris Ferruso, NFIB/Ohio legislative
director at 614-221-4107 or [email protected].