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The Chamber
State UI Fund Debt Leads to Higher Employer FUTA Taxes
Tuesday, 31 January 2012 16:51
The state’s Unemployment Insurance Trust Fund has been insolvent since 2009 and ended 2010 with a deficit of $9.8 billion and growing. Unemployment benefits continue to be paid to unemployed workers, but the payments are now coming from a federal loan. FUTA taxes were increased because the loan has not been repaid for two years.
The FUTA contributions pay for the administration of the UI program and are separate from the contribution employers make to the state UI Trust Fund to pay regular UI benefits. The taxable wage ceiling (TWC) or wages subject to UI taxes has remained at the federal minimum of $7,000 while the average weekly wage and minimum wage have more than doubled. More unemployed workers are getting higher benefits while the contributions from employers have remained static, creating the current UI Fund imbalance. Information from CalChamber. Additional information.
