HONOLULU (AP) – Hawaii Governor David Ige on Tuesday signed legislation temporarily lowering the unemployment insurance tax rate that employers must pay for their workers.
The surge in the number of unemployed since the coronavirus pandemic began last year has quickly depleted Hawaii’s unemployment insurance trust fund. This triggered what under the old law would have been a steep rise in tax rates to replenish the fund.
To prevent employers from having to shoulder this burden at a time when businesses are already grappling with pandemic public health restrictions and a weak economy, state leaders have decided to cut the rate that employers must pay for 2021 and 2022.
Without the new law, employers would have had to contribute an average of $ 1,800 per employee per year to the trust fund, but under the new law that average drops to $ 850. This year, the average payout was $ 620.
“If we hadn’t acted and got to this point today, employers would have been hit with very high unemployment contributions, especially when they could least afford it,” Ige said at the time. news conference before signing the bill.
The Hawaii Unemployment Insurance Trust Fund had a balance of about $ 500 million before March 2020. In April, the unemployment rate climbed to 23.8% and in just a few months the fund balance. trustee fell to almost zero as a flood of workers demanded benefits. The state began borrowing from the federal government to replenish the fund in June. So far, the amount borrowed is around $ 700 million.
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