Higher jobless taxes in Iowa

Iowa’s 80,000 employers will pay higher unemployment taxes in 2011, Iowa Workforce Development officials said Thursday.

Officials said a higher number of unemployment claims and people remaining jobless longer have "besieged" the Unemployment Tax Trust Fund.

Iowa also increased the tax rate on employers in 2010.

The percentage increase is different for each employer, depending on such factors as previous layoffs, how long the company has existed and hiring practices. For example, firms with seasonal workers and regular shutdowns will pay more than companies that have fewer shutdowns or layoffs.

The state expects expect to generate an additional $88 million next year over what it would have collected had rates remain unchanged, said Kerry Koonce, and Iowa Workforce Development spokeswoman.

After the change from 2009 to 2010, about 43 percent of Iowa employers didn’t pay any tax. That could change in 2011, Koonce said.

"Some employers may not see a change, it depends where they fall in the (tax) table. The average change will be less than 1 percent spread out across all employers. But there will be some employers that will see a 4 percent change," she said.

Nebraska will announce any changes in its tax rate sometime in mid- to late-November, said State Labor Commissioner Cathy Lang. The state will mail notices to employers in early December with information on their assessments.

In Iowa, employers in 2011 will pay taxes on the first $24,700 they pay employees.

Iowa uses eight brackets to determine how much employers pay into the trust fund. The eighth bracket has the lowest rates, the first bracket has the highest rates.

Each bracket then is broken into 21 tiers. Companies with more layoffs pay in the higher tiers, while new companies or those with lower turnover pay from lower tiers, or sometimes none at all, Koonce said.

The increase is not as significant as that in 2010, when officials moved employers paying taxes from the sixth to the fourth bracket. For 2011, employers will move from the fourth bracket to the third bracket.

"The recovery is in a very slow period," Koonce said. "We’re not forecasting job recovery until well into 2011."

The Iowa Unemployment Tax Trust Fund has a balance of $507 million. Before the recession began in December 2007, the balance was "several hundred million higher than what it is," Koonce said. Exact figures were unavailable.

The recession has bankrupted unemployment trust funds in 35 states, prompting those states to borrow from the federal government.

Iowa’s fund last went dry in the early 1980s. After that, the state created the tiered contribution scale to keep the fund solvent, Koonce said.

Nebraska’s trust fund currently has $217 million.

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