The Voice of Kapolei - Aloha Kapolei (feb 2008)

Aloha Kapolei (feb 2008)

Written by Lt. Gov. Duke Aiona

Monday, February 11 2008

Cross one worry—unemployment insurance tax—off the checklist of many small businesses in Kapolei. Relief from that tax is coming in the form of a new law that took effect January 1st.

After the 2007 legislative session, Gov. Linda Lingle signed into law Act 110, which will save businesses statewide an estimated $151 million over the next three years. The measure dramatically reduces the taxable wage base for unemployment insurance payments by 63.1 percent, from $35,300 to $13,000. Savings for Kapolei employers will differ depending upon their unemployment experience and amount of payroll paid out each year. However, the number of employers statewide, who will pay no unemployment insurance taxes, will almost double from 5,000 in 2007 to 9,000 in 2008. A key provision of the law establishes a tax break on unemployment insurance by lowering the required payments through 2010. As a result of this policy initiative, businesses will stand on firmer ground over the next three years. Since the tax cut isn’t scheduled to expire until 2010 that should translate into brighter prospects for business growth.

The policy initiative caps a three-year effort by the administration, working collaboratively with business and labor groups to enact unemployment insurance reform, among them being the Hawai‘i Chamber of Commerce, National Federation of Independent Business – Hawai‘i, International Longshore and Warehouse Union, Hawaii Government Employees Association, Retail Merchants of Hawai‘i, Society of Human Resource Management, and the Building Industry Association of Hawai‘i.

The law takes effect at a time when the state’s job market remains solid. In November, the latest month for which data is available, unemployment stood at 2.9 percent, which economists consider to be full employment.

Forecasts indicate the state’s economy will continue to show moderate growth this year.

With fewer people signing up for unemployment benefits, the state has accumulated a $562 million balance in its unemployment trust fund. The average payout for the past two years has been $95 million, according to the Department of Labor and Industrial Relations. Given that reality, the state is reasonably positioned to ease the unemployment insurance burden on Kapolei businesses for at least the next few years.

Our administration will continue to work in partnership with the business community to improve Kapolei’s business climate and lower the cost of doing business in our state. As the administration outlines our legislative priorities for the months ahead, we encourage you to get involved in the legislative process to ensure we can continue to implement significant reforms that will help Kapolei businesses succeed and keep our overall economy strong.

Lt. Governor Aiona is a resident of Kapolei.

Social Bookmarks: