Oregon Legislature looks to ease payroll tax hikes on pandemic-ravaged businesses
(The Center Square) – Oregon lawmakers are making a bipartisan effort to help ensure businesses hardest hit by the pandemic pay no more than their fair share to help jobless workers get on their feet.
When jobless Oregonians claim unemployment benefits, that money comes out of the state’s unemployment insurance trust fund and ultimately their former boss who pays into it every year under law.
This year, Oregon’s payroll tax schedule will see average rates of 2.26% on the first $43,800 paid to each employee.
In many states, jobless workers can claim unemployment benefits for up to 26 weeks of benefits. Under the American Rescue Plan passed by Congress earlier this month, claimants will see their weekly payments shoot up by $300 starting this week. Claimants who have exhausted their regular unemployment benefits may also apply for extended benefits of up to 79 weeks.
Thousands of Oregonians were hit with lapses in increased and extended unemployment benefits last year upon the expiration of the CARES Act and other federal programs.
On December 21, Oregon’s unemployment trust fund stood at $3.86 billion after paying out $2.5 billion in benefits last year, or more than five times what it paid out in benefits in 2019. This year, the Oregon Employment Department estimates payments will total $1.9 billion, though it expects the fund to remain solvent.
In Oregon, employers with the highest layoffs tend to pay the greater amount into the trust fund. With the onset of the pandemic, that means the leisure and hospitality industry will likely see the highest unemployment insurance tax hikes after shedding 81,600 jobs in 2020.
In the past year, the state has made efforts to ease the fiscal pain on employers. The Oregon Employment Department currently allows businesses that saw their unemployment insurance tax rate rise by half a percent or more in 2021 to defer a third of this year’s payments through June of 2022.
House Bill 3389 would go a step farther, forgiving a third of some employers’ tax bill outright if they saw tax increases of 2% or more.
Sponsored by three House Democrats and two Republicans, HB 3389 would cost the state about $84 million in unemployment insurance trust fund payments, according to a legislative analysis. The bill also resembles the bipartisan legislation that House Republicans demanded this week in exchange for revising the House’s bill reading rules.
As Oregon works to move up vaccinations to the general public by May 1, more businesses are expected to host larger throngs of customers. Gov. Kate Brown announced on Tuesday that starting March 26 through April 8, Josephine and Klamath will be the only two counties in the state to remain at Extreme Risk level. More than half of the state’s 36 counties will remain in Moderate to Lower Risk levels, meaning indoor dining and other activities can resume at 25% capacity.
HB 3389, which would take effect 91 days after the state legislature adjourns, is awaiting a hearing in the House Rules Committee.
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