NFIB applauds a reduction to the lowest level in 24 years
Iowa small-business owners will not be stung with higher unemployment insurance rates in 2023. Instead, they’ll see a reduction in them, according to an August 24 announcement by Gov. Kim Reynolds and the Iowa Workforce Development department.
“What a world of difference having a pro-small-business governor makes,” said an elated Matt Everson, Iowa state director for NFIB. “Many states were put in the unenviable position of having to borrow money from the federal government in order to keep their unemployment trust funds solvent and benefits going to the record number of unemployed caused by the pandemic.
“It’s what their legislatures and governors did to pay those loans down or off that mattered to small business, which were facing stratospheric, solvency threatening increases in their UI taxes. Fortunately, we have a governor who chose to hold small business harmless not hostage and used $490 million of CARES Act money and, later, $237 million in ARPA money to pay off the federal UI loan. Other states were not so lucky. California still owes the federal government $17.6 billion for the UI loans it took out, and its governor and legislature don’t seem to care.”
Highlights from the governor’s news release.
- “Today’s announcement is great news for our employers who are already dealing with significantly increased costs due to historic inflation,” Gov. Reynolds said. “Iowa faced the pandemic and its economic impacts head on, and due to our conservative fiscal practices and prudent investment in Iowa’s Unemployment Trust Fund, unemployment insurance taxes in our state will soon reach their lowest rates since 1999.”
- “The trigger for deciding which unemployment insurance rate table to implement is derived from a formula based primarily on the balance in Iowa’s unemployment insurance trust fund, unemployment benefit history, and covered wage growth … Based on this formula, contribution rates will be drawn from Table 8 in calendar 2023 after five consecutive years of being drawn from Table 7. The switch means that a business paying the median tax rate (on employee wages totaling $36,100 or more annually) and remaining in the same tax rank as 2022 would pay $72.20 less per employee in unemployment taxes in 2023.
- ”’Governor Reynolds’ commitment to maintaining and preserving the Unemployment Trust Fund throughout the pandemic will result in real savings for Iowa employers in 2023,’ said Beth Townsend, Director of Iowa Workforce Development. ‘Employers will see, on average, a 25 percent reduction in their unemployment taxes next year, and those savings will provide more resources for Iowa employers to invest in growing their businesses.”’