EDITORIAL: Nevada keeps UI tax steady

Nevada’s battered businesses finally received a bit of good news.

This month, Gov. Steve Sisolak announced that the unemployment insurance tax rate — which helps fund jobless benefits — will remain at 1.65 percent. Previously, the Employment Security Council had recommended increasing the average tax rate to 2 percent. Currently, the tax costs an average of around $620 an employee. At the 2 percent rate, the cost would have been $750 a head.

A $130 increase may not seem like a lot to someone who has never run a business. But when a business is struggling, every dollar can be the difference between paying the bills and closing the doors.

“Since 2019, the average tax rate has declined to its lowest level in more than a decade, and we intend to keep it low,” Gov. Sisolak said in a statement. “I appreciate the hard work of the Employment Security Council and the Employment Security Division administrator to hear from all the stakeholders and come to a conclusion that protects Nevada’s businesses in this critical moment.”

The push for more money in Nevada’s unemployment trust fund is understandable. During strong economic times, it runs a surplus, which is supposed to tide the state over when there’s an economic downturn.

Before the pandemic, Nevada’s unemployment trust fund was in a strong position. In the fall of 2019, it contained $1.85 billion. That money was supposed to cover almost 17 months of benefits based on Nevada’s three most expensive years from the past two decades. Instead, the trust fund ran dry last December. A 30.1 percent unemployment rate will do that. When the trust fund runs out of money, the state can borrow from the federal government to keep the benefits flowing.

That normally creates loans, which businesses have to repay in the following years. During the legislative session, however, lawmakers earmarked $335 million in federal funding to pay off the loans Nevada took out. That money was part of the billions in funding President Joe Biden and congressional Democrats airdropped into Nevada and other states.

That bill, dubbed the American Rescue Plan, was a boondoggle. The way it pumped money into the economy, including expanded unemployment benefits, contributed to the inflation problems plaguing businesses and families. But Nevada must still spend that money well. Using it to help businesses, instead of creating new government programs, is a wise approach. If Nevada businesses had to pay off that loan, keeping the unemployment insurance tax rate flat would have been much more challenging.

Maintaining the existing tax rate steady after a challenging last 18 months for many businesses was an obvious move, but it was still the right one.