Unemployment Trust Fund to Reach Solvency in 2015; S.C. Businesses to Pay Less in Federal Unemployment Taxes
Source: Palmetto Workforce Connections
January 29, 2015
DEW is on track to have the state’s loan to the federal government for the unemployment trust fund paid off in summer 2015 thanks in part to making a record three payments last year.
In December, the agency paid $75 million bringing South Carolina’s loan balance to $195 million and saving the state potentially $1.7 million in interest.
“Making three early loan repayments in a single year is a great sign for our state and is another example of the kind of fiscally responsible government that our administration is committed to delivering,” Gov. Nikki Haley said when the payment was announced. “Ultimately, these payments are saving our businesses and taxpayers millions in interest, and are the direct result of the record breaking employment South Carolina continues to experience.”
When the 2014 unemployment tax rate was set, the federal government estimated 1,968,209 South Carolinians were employed. As of October 2014, 2,045,499 people were employed in the state, leading to additional tax collections.
In addition, South Carolina paid approximately $70.3 million less in unemployment benefits between November 2013 and October 2014 compared to the same time frame during the previous year.
“I am excited about this extra payment because it is an outcome of our state experiencing record highs in employment during the past year,” DEW Executive Director Cheryl M. Stanton said in December. “At the same time, we have seen a dramatic decrease in benefit payments, which shows our economy is continuing to improve.”
To date, South Carolina has repaid more than $780 million of the $977 million borrowed from the federal government.
For the fourth consecutive year, S.C. businesses will only pay the minimum 0.6 percent per employee for federal unemployment taxes because the Palmetto State once again met the requirements—including making voluntary loan payments— to obtain the maximum credit. Receiving this credit means S.C. businesses will save up to $140 per worker.
South Carolina is the only borrowing state to receive the full 5.4 percent credit.