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State should raise taxes, freeze unemployment benefits, report says
Monday, July 14, 2008
COLUMBUS — Ohio needs to raise employer taxes and maybe freeze benefits to shore up the state fund that provides weekly cash to unemployed workers, a new report said on Monday, July 14.
The Unemployment Trust Fund is nearly broke. The balance dwindled from $2.4 billion in December 2000 to $424 million as of June 2008 because it paid out more money than it took in.
The money in the fund comes from taxes paid by employers. Roughly 126,000 Ohioans are receiving jobless benefits now.
Ohio may have to borrow money from the U.S. Treasury in 2008 and 2009.
The 16-page report from Wayne Vroman of the Urban Institute in Washington, D.C. said in the long run, Ohio needs to index its unemployment taxes so that they automatically grow with increases in average wages.
The problem is that benefits have increased based on the state's average weekly pay while the taxable wage base — the amount of an employee's salary subject to the tax — has stayed the same.
The report goes to the Unemployment Compensation Advisory Council, which will make a recommendation to the General Assembly.
State lawmakers recessed for the summer and it's doubtful they'll return to Columbus to hike business taxes or freeze jobless benefits just before an election.
Contact this reporter at (614) 224-1624 or lbischoff@DaytonDailyNews.com.
