House Bill 1278 has been sent to the office of Gov. David Ige for consideration as state employers eagerly await a signature that will provide unemployment insurance relief.
Should the governor fail to sign the bill, employers can expect a large scheduled increase in unemployment tax. To head off the increase, the bill has been fast-tracked to the governor’s office.
Currently, eight possible tax schedules have been established – A through H, with the highest being H. The Hawaii Tribune-Herald reported the unemployment insurance rate will be set at D, last used in 2015. Without intervention, it would have been set at H.
The measure has gained widespread support from Hawaiian businesses, particularly restaurants, and the Chamber of Commerce.
“Most restaurant operators here do not expect business conditions to improve much in the coming years, and 43% say it is unlikely their restaurant will still be in business six months from now without additional relief packages from the federal government,” Victor Lim, legislative lead for the Hawaii Restaurant Association, wrote, as reported by the Hawaii Tribune-Herald. “To say that many businesses here in Hawaii are in dire straits will be an understatement.”
The state borrowed $700 million from the federal government in 2020 to cover a significant number of claims generated by COVID-19-related furloughs and layoffs. Many employees were sent home as the government shut down businesses in an effort to stifle the coronavirus spread.
House Finance Chair Sylvia Luke said that under a schedule H, employers could go from paying $600 per employee to a total of $2,500 per employee. The rate schedule is determined by ratio of the reserve fund to the adequate reserve fund.
“Passing an unemployment tax relief bill is crucial to the survivability of the small and local business community and will save much-needed jobs," Chamber of Commerce Hawaii President and CEO Sherry Menor-McNamara told Pacific Business News. "The chamber is very appreciative for the Legislature and administration’s recognition of the importance of this effort. This is one our top priorities this session as we continue to focus on economic recovery and the path forward.”