Bill to offset unemployment insurance spike with state funds passes House, Senate

The newest unemployment tax relief bill — aimed to give small businesses lower unemployment insurance premiums next year — has now passed both chambers of the Legislature.

The bill passed out of the Senate two weeks ago, and has now made its way out of the House. It will need to return to the Senate for final approval before it can go to the governor’s desk, as the House added amendments.

Unemployment insurance taxes, which are paid on the basis of how many workers a business employs, have skyrocketed for many business owners this year to refill the Unemployment Trust Fund after 13 months of record joblessness. It is these taxes alone that normally fill the trust fund.

However, Engrossed Substitute Senate Bill 5478 lowers the increase in those insurance premiums by offsetting them with state funds.

New bill promises help for WA businesses still feeling unemployment tax pain

“There is $500 million that we are going to be putting into the pockets of our business owners,” said Rep. Steve Bergquist (D-Renton).

Just as a driver’s car insurance goes up if they cause an accident, unemployment insurance goes up if a business lays off employees. That means the businesses that had to close or reduce capacity this past year, and in turn had to lay off employees, have been hit hard with unemployment insurance tax increases.

It’s a tough blow for businesses already reeling from the loss in revenue brought by shutting their doors. One gym owner told KIRO Radio’s Dori Monson that his premiums increased by a factor of 10 this year.

“We have all experienced in our communities, certainly in our business communities, a lot of hardship over this past year,” said Rep. Vicki Kraft (R-Vancouver). “And our businesses have really borne a heavy brunt of the COVID-19 shutdown situation.”

That is why this bill prioritizes the industries that were hit hardest by the pandemic restrictions, such as hotels, restaurants, bars and nightclubs, hair and nail salons, retail, gyms, entertainment venues, tourism-related businesses, and a whole host of others. It also targets the state’s smallest mom-and-pops, which do not have large stockpiles of cash to fall back on for massive tax increases.

“We really wanted to help out our small businesses,” Bergquist said. “And so we’ve called them out, and made sure that businesses with 20 or fewer employees that have had rate increases over their last year of experience can make sure to benefit with significant rate relief.”

The Legislature passed a bill earlier this session to help decrease the unemployment tax hit for this year, but many businesses still saw skyrocketing rates. With the use of state funds, this bill goes further to help them out more next year.

“Trying to restore the unemployment benefit fund situation shouldn’t be on the backs of businesses,” Kraft said.

The unanimously-passed bill received enthusiastic support from legislators on both sides of the aisle, though some Republicans made an additional push to fully open the state back up.

“Obviously, a lot of additional help would be if indeed we could get all of the businesses open,” said Rep. Larry Hof (R-Vancouver).

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