N.H. cuts unemployment tax
New Hampshire's unemployment trust fund is regaining its health, Gov. John Lynch announced yesterday, allowing the state to cut the employer tax that pays into the fund.
The fund, which pays out unemployment benefits, was in danger of becoming insolvent during the recession. In 2009, the state imposed a 0.5 percent emergency surcharge on employers to help boost the fund balance. A second 0.5 percent surcharge was imposed in 2010.
Rates vary, but employers pay an average rate of 3.5 percent, including the surcharges, on the first $14,000 in wages per employee, said John Carpenter, financial analyst for New Hampshire Employment Security.
As the economy has recovered, the number of people seeking unemployment benefits has dropped, taking pressure off the trust fund. Initial claims in New Hampshire peaked in December 2008, at nearly 13,200. In August, there were about 4,600 initial claims for unemployment benefits.
The trust fund now contains more than $172.1 million in state funds, Carpenter said..
As of Monday, one of the two surcharges has been dropped. The second surcharge should be dropped Jan. 1, Lynch's office said, taking the average employer rate to 2.5 percent.
The decision to drop the surcharges was made by Employment Security Commissioner George Copadis, in consultation with Lynch and the state Advisory Council on Unemployment Compensation, according to Lynch spokesman Colin Manning.
'This is good news for New Hampshire businesses, and I am very pleased that we are able to provide this tax cut for employers across the state. We made a promise to businesses that we would cut this tax once the unemployment trust regained its strength and we are keeping that promise,' Lynch said in a statement.
He added, 'The recent recession marked the most difficult economic time the state has faced since the Great Depression. Through our careful management of the unemployment trust fund, we were able to ensure the fund was able to meet the needs of New Hampshire families at a time when they needed it most.'
(Ben Leubsdorf can be reached at 369-3307 or email@example.com or on Twitter @BenLeubsdorf.)