Governor Steve Beshear has signed into law a plan to save employers from federal unemployment insurance tax hikes. At his first ceremonial bill signing of the year, Beshear praised lawmakers and the business and labor communities for reaching a compromise.
House Bill 495 would allow Kentucky to borrow money from a state organization to repay interest on a more than nine hundred million dollar unemployment loan.
And while the bill will still raise taxes for employers in two years, it’s at a lesser rate. Beshear says that’s a fair answer to the problem.
“There were no easy answers to this. There isn’t any silver bullet out there that we could latch onto that made things OK without everybody stepping up and being a part of this solution,” he says.
Beshear praised the new law as one that would keep costs lower than anticipated for employers.
“Without this solution,Kentucky employers would have completely lost their federal tax credit, meaning their federal unemployment insurance tax would have increased by almost sevenfold," Beshear says.
Employers still will have to pay a higher tax due to the state’s in-house loan, but it will be hundreds of dollars less a month than the federal penalty would have been.
This is the second time the issue has come up in the past two years, and all involved parties hope the new law solves all problems for the immediate future.