Indiana Manufacturers Association Supports Call for Delay in Unemployment Insurance Tax Increases

It looks as though your calls, emails and letters are making a difference. This afternoon, President Pro Tempore David Long announced a plan to delay the scheduled increase in Indiana’s unemployment insurance taxes. This delay will save Indiana employers an estimated $262.5 million next year in additional unemployment insurance taxes. Any delay will require action by the entire Indiana General Assembly and a signature of the governor.

The top priority of our state should be saving existing Hoosier jobs during this severe economic downturn. Given the new data that has come to light since the legislature adjourned, we think a delay in the scheduled unemployment insurance tax increases is a wise and prudent action.

Even with a delay and under current tax schedules, Indiana employers should be aware that many could still see tax increases next year if they have had to reduce their workforce and had unemployment claims charged to their account.

The general assembly passed HEA 1379 in the 2009 legislative session. HEA 1379 contained significant employer-paid tax increases to fund the payment of unemployment benefits. Currently, Indiana’s unemployment insurance trust fund is insolvent; and the state is borrowing funds from the federal government to pay unemployment benefits.

This is not a unique situation. Because of the recession, currently 20 states and the Virgin Islands have insolvent trust funds, with approximately 10 additional states near insolvency.

So far in 2009, Indiana is the only state that enacted significant unemployment tax increases. There was concern from the outset what impact this would have on existing employment and future economic growth. A delay in these tax increases will save $262.5 million in 2010, and allows additional time to have a better understanding of an economic recovery and possible federal intervention and assistance. The IMA encourages the general assembly to approve this delay as soon as possible and put Hoosier jobs first.

We will continue to advocate for IMA members and keep you apprised of this developing situation.