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Plan moves ahead to cut SD unemployment insurance tax rates

By Bob Mercer

Capitol Correspondent

PIERRE — A plan to reduce the tax rates charged for unemployment insurance in South Dakota moved forward Monday.

0 Talk about it

The state Unemployment Insurance Advisory Council voted to recommend a two-part approach that would save businesses about $11 million total by the end of 2015.

The reserve ratios would be reduced for all employers who participate in the system. That means they would need a smaller amount of money per employee in their state accounts.

The plan also now calls for keeping the wage base at $14,000, rather than go up in 2015 as currently scheduled in state law.

Businesses pay unemployment taxes based on the actual earnings of workers up to the $14,000 wage level.

The council meets again Wednesday morning after state administrators have reviewed the latest version of the plan.

The council looked at four proposals last week.

Department of Labor officials built a fifth proposal for Monday’s meeting.

Shawn Lyons, executive director for the South Dakota Retailers Association, suggested Monday blending two of the proposals. Lyons said the Legislature probably is willing to wait on the move to $15,000 until the Obama administration tells states that it’s required. “I’m not hearing that day is here,” he said. State Labor Secretary Pam Roberts explained the timeline for the changes.

She said the advisory council and her department need to submit their proposed legislation by week’s end to the governor’s staff. The governor will make a final decision in November or December whether to submit it to the Legislature for the 2014 session that starts in January.

If the Legislature makes a change, it would take effect for 2015 calendar year.

“It’s not a final product by any means,” Roberts said.

The council set a revised target for the unemployment trust fund Monday. It now wants $78 million in reserve.

That is a small inflationary increase from the $76 million target previously set.

Unless the tax rates are changed, the fund will have an estimated $89 million in reserve by the end of 2015, according to Labor officials.

The current forecast calls for ending 2013 with $64 million in reserve.

The council wants to be able to cover the largest amount of benefits paid in a year. That was $63.6 million in 2009 during the depth of the recession.