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Employers could see drop in unemployment insurance taxes

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By Bob Mercer

Capitol correspondent

PIERRE — The state panel that provides guidance on unemployment insurance taxes in South Dakota meets Monday morning to consider recommending reductions in the tax rates starting in 2015.

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The balance in South Dakota’s trust fund for unemployment insurance stood at about $63.5 million on Aug. 31 and is projected to reach the target of $76.1 million by the end of 2014. Unless there is a significant downturn in the economy, the trust fund balance is forecast to reach $89.3 million by the end of 2015.

State Labor Secretary Pam Roberts said the system would be over-funded if that occurs. Roberts, who retires in mid-October, has asked the state Unemployment Insurance Advisory Council to look at UI tax-rate reductions that could be proposed to the Legislature for action in January. The panel looked at four sets of recommendations during a meeting Tuesday and will gather again Monday to consider another proposal.

The internal debate among members of the panel is whether all contributors to the system should be treated somewhat equally by a package of reductions or those users who don’t draw on the system very often or not at all should receive larger reductions.

The seasonal nature of the construction industry tends to make it the largest user of the system. Many construction businesses see their laid-off employees draw more benefits from the system than those employers pay into the system. The lowest users of the system tend to be retail businesses. All businesses were hit with surcharges in recent years during the depth of the recession, because the system had gone broke and required a federal loan, similar to many states across the nation.

The latest proposal was circulated Thursday by Roberts’ department. It would keep the standard range of tax rates in place but would reduce by one-third the penalty paid by negative users and reduce across the board the amounts per employee that all businesses would need to have in reserve in the system.

The meeting will start at 10:30 a.m. Central at the Kneip building conference room 3. The meeting also will be conducted via video-conference using studios in Aberdeen (DOL building, 420 S. Roosevelt St.); Rapid City (DOL building, 2330 N. Maple Ave. Suite 1); Sioux Falls (Dept. of Human Services building, 811 E. Tenth St.); and Watertown (location yet to be determined as of Thursday afternoon).

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