Indiana mulls $1 billion tax hike for unemployment fund

Gov. Eric Holcomb's administration is pushing for an increase in business taxes to provide $1 billion more for Indiana's unemployment trust fund.

Posted: Jun 10, 2019 9:18 AM

INDIANAPOLIS (AP) — Gov. Eric Holcomb's administration is pushing for an increase in business taxes to provide $1 billion more for Indiana's unemployment trust fund.

The proposed 17% increase would bring premiums paid by companies to a level recommended by the federal government, The Journal Gazette reported.

But key business groups urged lawmakers to weigh the impact of raising premiums against socking money away in the fund, which is used to pay unemployment checks when the jobless rate is high.

"How much money do you take out of the economy and just have it sitting on the sidelines when that money could be invested and creating jobs?" asked Brian Burton, president and CEO of the Indiana Manufacturers Association. "It's a fine balance."

The trust fund's current balance is $830 million, which is up from last year. Revenue is coming in slower than anticipated but is balanced by the current low unemployment rates, said Josh Richardson, chief of staff at the Indiana Department of Workforce Development.

Last year, only $251 million was paid in unemployment claims, compared to $1 billion to $1.8 billion a year during the last recession. Indiana's jobless rate stayed around 3.5% all last year, but topped 10% for much of the recession years 2009-10.

Republican Rep. Dan Leonard of Huntington, the Indiana House expert on the unemployment system, said the state is on track to hit $1 billion in unemployment fund reserves by the end of next year. U.S. Department of Labor guidelines indicate the state needs $1.8 billion on hand.

The proposal from the Holcomb administration came with roughly a month left in this year's state legislative session that ended in late April. Lawmakers balked at the recommendation and the proposal will have wait until next year to be reconsidered.

Richardson said it is better to be ready than have to scramble when times are tough.

"We're not really in the business of predicting what the future economy looks like, but in business cycle terms, we want to make sure that you're prepared for whatever comes next," Richardson said. "Raising those premiums on the other side — when you are in a downturn — is sort of the worst possible time to do it. The better time would seem to be while the economy is in pretty good shape."

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Lake3876207
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Cass15919
Elkhart158528
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Hamilton119194
Johnson1125113
Madison60061
Porter56233
Clark53942
Bartholomew53139
LaPorte44824
Howard44236
Tippecanoe4344
Jackson4012
Delaware39741
Shelby39722
Hancock35427
Boone32436
Floyd31941
Vanderburgh2913
Morgan28626
Noble27821
Montgomery24917
Clinton2471
White2399
Decatur23132
Grant22923
Dubois2113
Kosciusko2052
Harrison19622
Marshall1872
Henry18512
Vigo1828
Greene17226
Dearborn17122
Monroe17113
Lawrence17124
Warrick16729
Miami1461
Putnam1427
Jennings1324
Orange13122
LaGrange1282
Scott1263
Franklin1168
Ripley1086
Daviess10416
Carroll952
Wayne906
Steuben902
Wabash812
Newton8010
Fayette797
Jasper741
Jay580
Clay533
Randolph523
Rush513
Fulton511
Washington501
Pulaski500
Jefferson491
Whitley453
DeKalb451
Starke423
Perry390
Huntington382
Sullivan371
Wells350
Owen341
Brown331
Benton320
Knox310
Blackford272
Tipton261
Crawford250
Adams231
Switzerland220
Spencer221
Fountain222
Gibson202
Parke180
Posey160
Martin140
Warren131
Ohio130
Vermillion100
Union100
Pike60
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