The rate reduction came in what is called the “mutualized rate,” one of three factors included in establishing the unemployment tax rates levied on the first $9,000 in each employee’s earnings, Policy Matters Ohio said. The state uses the mutualized account to pay benefits to former employees of companies that have gone out of business.
That part of the employer’s tax declined this year by $18 per employee because federal stimulus funds Ohio received were put into that account, increasing the amount there and causing the applicable tax rate to fall.
The situation will correct itself as those federal stimulus funds are spent, the balance in the account falls and the tax rate is increased by an annual adjustment, said spokesman Ben Johnson of the Ohio Department of Job and Family Services, which administers the account.
Because other factors are involved in setting the unemployment compensation tax rate, the total estimated rate for employers this year will be 3.3 percent, up from 3 percent in 2009, Johnson said.
He said of the Policy Matters Ohio study: “I think they give an incomplete picture.”
Lawmakers have been unwilling to freeze unemployment benefits and increase the tax rate to stabilize the fund. Lawmakers and Gov. Ted Strickland have been awaiting recommendations from the state’s Unemployment Compensation Advisory Council as to steps that should be taken.
The council’s co-chairman, Andrew Doehrel and William Burga, didn’t respond to telephone calls requesting comment Friday.
Ohio is one of more than 30 states borrowing from the government to continue issuing unemployment checks as jobs disappeared during the recession. Ohio has borrowed more than $2.1 billion and will have to start paying interest on it in January 2011 at an annual rate of 4.66 percent.
Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.
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