Legislative Alert SUTA Bill
3/2/2015
Background:
“We started getting calls about exorbitant SUTA bills early this year and new we had to do something during the legislative session.” Carol Wight, CEO of NMRA. “We worked with other business groups and the administration of Workforce Solutions to come up with a fix. We just hope House Bill 482 has a chance to get through the legislature in time to make a difference. We know our members will not feel the impact of this bill immediately but it goes a long way to solve the imbalance in the UI fund.”
URGENT CALL TO ACTION:
Please call your legislator to let them know we need to pass this bill, this session! Link here to find your legislator.
OP-ED:
See the text of the Op-Ed Below
New Mexico has a Serious Problem with Unemployment
New Mexico has a serious problem with unemployment and this time it’s not the fact that people remain unemployed. The problem is that the fund, which pays employees when they lose a job through no fault of their own, is inadequate even though many employers’ premiums have more than tripled this year.
This issue is critical to continued economic recovery in New Mexico. Without a fix, New Mexico risks seriously hurting the new and small businesses that must hire employees for the recovery to continue.
The drastic changes experienced by about 30 percent of NM employers is due to a 2013 legislative fix to address impending insolvency of New Mexico’s UI trust fund. The new rate calculations became effective January 2015 and many businesses have seen increases in their payments – some drastically.
One example of the drastic increase is a small restaurant that historically paid around $400 annually for SUTA. This year, that same restaurant will pay $14,700. The business had two unemployment claims totaling $12,100 in the last three years. With claims totaling $12,100, the UI tax was increased 3,675 percent!
The NM UI Trust Fund does not meet the adequacy requirements of the U.S. Department of Labor (USDOL) nor is it projected to meet them by the end of 2015. That’s not good for New Mexicans out of work OR for employers who have newly increased State Unemployment Tax Act (SUTA) payments.
The first step to strengthen the UI Trust Fund was to increase the amount employers put into the fund. The next step is to support HB 482 Reduce Some Unemployment Benefits, sponsored by Representative Larrañaga. This bill will not change the employers’ contribution formula nor will it provide immediate relief to the fund. It will, however, help shore up a fund that is currently considered minimally solvent.
It is important that New Mexico’s UI Trust Fund benefits be adjusted in this current legislative session and this is why:
1) Compared to other states, NM’s benefit payments are much higher, which is stressing the fund. This bill seeks to bring NM more into line with other state’s benefits plans. With the changes in this bill, New Mexico would have the same or better unemployment benefits than our neighboring states.
2) While the NM UI Trust Fund has gotten stronger with increased employer contributions, it is inadequate by USDOL standards and current estimates indicate it will still be inadequate at the end of 2015. This situation could get much worse because we have not seen the full impact of layoffs in the oil and gas industry. The last thing we want to see happen is for the federal government to force New Mexico to borrow funds to remain solvent as it has done in several other states.
3) Many NM employers are struggling with increased UI rates and want to know their tax dollars for the unemployed are maximized in the best way possible.
While this bill does not solve all of the complications inherent to this fund, it begins to restore balance in the system. We ask that you support Representative Larrañaga’s bill, HB 482 Reduce Some Unemployment Benefits. Let’s bring NM’s UI benefits in line with other states while we assure the fund’s health to provide for those who need it most.
Signed,
New Mexico Business Coalition
New Mexico Restaurant Association
Association of Commerce and Industry
Independent Insurance Agents
Santa Fe Chamber of Commerce
