State works to address unemployment insurance increase

Stephen Dow, Sheridan Press via Wyoming News Exchange
Posted 9/21/21

When it comes to recent changes in unemployment insurance taxes, the numbers are staggering and, for many small businesses, unsustainable.

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State works to address unemployment insurance increase


SHERIDAN — When it comes to recent changes in unemployment insurance taxes, the numbers are staggering and, for many small businesses, unsustainable.

Consider for example, Dr. Dana Leroy of Sheridan and her business Leroy Family Dental. In 2020, Leroy paid $171 in unemployment insurance taxes. During the first quarter of 2021 alone, she paid $1,395.

Or consider First Northern Bank in Buffalo whose unemployment insurance rate has gone from .18 percent to 1.31 percent in a year, according to Chief Operations Officer Rick Myers. This is a 725-percent increase costing the organization approximately an additional $30,000 each year.

These are not isolated examples, according to Sen. Dave Kinskey, R-Sheridan, but rather part of across-the-board increases — across the state and the nation.

To understand why unemployment insurance tax rates are skyrocketing, you have to go back to the start of the pandemic in 2020, Kinskey said. During the spring of 2020, unemployment claims were filed in record numbers, hitting a high in May when more than 110,000 unemployment claims were filed, according to the Wyoming Department of Workforce Services.

This meant some major draws into the state’s Unemployment Insurance Trust Fund, which pays out the unemployment claims. According to the U.S. Department of Labor, on New Year’s Day 2020, Wyoming’s Unemployment Insurance Trust fund had a balance of $376.91 million. A year later, on New Year’s Day 2021, that balance was $281.42 million.

The trust fund is replenished through unemployment insurance payments, according to Ty Stockton, communications manager for the Wyoming Department of Workforce Services. So when the fund is low, as it is this year, unemployment insurance rates go up. The health of the trust fund determines the base rate of unemployment insurance taxes for the coming year.

Kinskey said Gov. Mark Gordon is aware of the problem and has made efforts to remedy the situation for local business owners. The governor made two deposits to the trust fund: $25 million in September 2020 and $39.1 million in March 2021. While some local businesses may have seen a decrease in insurance rates after those deposits, others didn’t.

The reason for this, according to Stockton, is the Department of Workforce Services “initially chose to be very conservative with the parameters around non-charging and only non-charged employers for direct COVID-related UI claims.” This means businesses mandated to close during the government shutdown, such as restaurants, likely saw some unemployment insurance relief. But businesses like Leroy’s dental clinic, which was not required to close via state mandate, saw little relief. According to Kinskey, dental clinics were advised to close by the American Dental Association, but were not mandated to close by the state.

After those two payments, Gordon asked the department to look into additional opportunities to non-charge employers, Stockton said. The department determined an additional $58 million would need to be deposited in the Unemployment Insurance Trust Fund. Backfilling these funds into the trust fund allows all employers to be non-charged for any unemployment insurance charges from early March 2020 through Dec. 31, 2020, Stockton said.

The main question right now is where the state will find that $58 million, Kinskey said. Discussions are ongoing about whether to use Coronavirus Aid, Relieve and Economic Security (CARES) Act dollars, Federal Emergency Management Agency (FEMA) dollars or another source of funding to backfill the fund, Kinskey said.

Kinskey said he hoped the $58 million would be deposited into the trust fund — and businesses would start seeing some relief — by the end of 2021.

“We’re moving at the speed of government, which is very frustrating for me, and I know it’s very frustrating for these businesses,” Kinskey said. “But we are working to address it as quickly as we can, and I’m hoping, before the end of the year, they can have some relief.