This editorial wss provided by the Oregon Employment Department. The UI Trust Fund remains solvent and maintains benefits to Oregon's workers.The UI Trust Fund is better prepar ed for longer economic cycles.Businesses get a lower statewide UI tax schedule that collects about 10 percent less overall.Employers will save around $2 billion in taxes through 2029.In addition to short-term tax relief, HB 3389 extended the look-back period for the fund adequacy percentage ratio from 10 years to 20 years and omitted calendar years 20 from the formula. With 2021’s House Bill 3389, lawmakers protected employers from increased payroll taxes that might have resulted from the unprecedented number of Oregonians who received UI benefits during the Pandemic Recession and allowed employers to defer or avoid some tax liability. While employers in other states saw additional UI taxes and other costs, Oregon has been a careful steward of employers’ tax dollars. Those states also faced borrowing costs, restricted options on policy, and higher federal payroll taxes and surcharges for employers. Thanks to Oregon's healthy UI Trust Fund, we did not have to borrow any money during the Pandemic Recession, unlike many other states. During a recession, this can be a vital support for our economy. Also, researchers have estimated that every $1 of UI benefits generates about $2 in economic activity in that community. During the recent Pandemic Recession, Oregon’s UI Trust Fund paid out $859 million in regular UI benefits from April to June 2020 - twice as high as any calendar quarter during the Great Recession. They also support communities and businesses by ensuring that money keeps flowing through the local economy during economic downturns. During the Great Recession and the COVID-19 pandemic, many states had to borrow money because their UI Trust Funds were not solvent - employers in those states pay more than $1 for each dollar of benefits paid to workers.īenefits don’t just help laid-off workers. One way to look at it is, with Oregon’s UI tax system, employers only had to pay 80 cents on the dollar for the benefits paid out. Due to Oregon’s self-balancing system, the more interest earned, the more likely we are to have a lower tax schedule. That means about 20 percent of the increase in the UI Trust Fund balance in the past 10 years came from interest earned - not employer payroll taxes. Over the last 10 years, UI Trust Fund interest added $797 million. Each employer’s individual tax rate is based on the amount of UI benefits their employees receive.Īlso, Oregon’s UI Trust Fund’s reserves earn interest. Once we have strong reserves, the tax schedule drops so employers have lower taxes. During strong economic times, the tax schedule increases so we can replenish Oregon’s UI Trust Fund. While there are federal requirements all states must follow with their UI trust funds, there is room for state flexibility, and Oregon has taken advantage of this to minimize employer tax rate volatility, protect employers from additional charges, and provide a strong safety net for recessionary times. Oregon has one of the best unemployment insurance (UI) tax systems in the nation.
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