Senate Reinstates Employer Unemployment Insurance Contributions

Employers’ V.I. Unemployment Insurance Fund contributions will increase from zero to 1.5 percent of payroll, that of new employers will double to 2 percent, and both will pay $25 annually per employee for Unemployment Insurance debt, if Gov. John deJongh Jr. signs into law a measure passed by the Legislature on Tuesday.

The Senate passed the legislation shortly before acting upon the 2013 budget bills, with 10 of the 15 members voting for and three voting against. Voting yea were Sens. Craig Barshinger, Carlton "Ital" Dowe, Neville James, Terrence "Positive" Nelson, Usie Richards, Ronald Russell, Sammuel Sanes, Patrick Sprauve, Celestino White and Janette Millin-Young. Voting nay were Sens. Alicia "Chucky" Hansen , Nereida "Nellie" Rivera-O’Reilly and Shawn-Michael Malone. Sens. Louis Hill and Alvin Williams were absent.

The changes are needed to fund unemployment insurance and stem a growing debt burden as the territory is forced to borrow money to pay unemployment insurance to V.I. workers, according to Labor Department officials.

Rising unemployment in the territory has led to an increase in unemployment claims, forcing the territory to borrow from the federal government to pay beneficiaries.

The current shortfall and growing debt arose from actions taken in 2001, when the Unemployment Insurance Trust Fund had a substantial surplus. That year the Legislature voted to reduce the minimum tax rate to zero and the new employer rate to 1.5 percent – changes that did not impact the trust fund while the economy was doing well.

The fund remained solvent until about 2008 when the recession increased claims and payables by 75 percent, according to the Labor Department.

The territory pays for the first 26 weeks of unemployment insurance with the federal government covering the rest, but with rising unemployment, the territory’s share is rapidly increasing.

The balance on the trust fund loan is $39 million, with an interest payment of $966,000 due in September, according to the Labor Department. The increased contributions are needed to bring funding into the system closer to the amount the territory has to pay out.

The Senate also passed a bill requiring doctors and health practitioners to include their credentials when advertising and to post them in their offices, with penalties for false or misleading advertising, if another bill approved in Rules Friday becomes law [Bill 0235]. The measure passed without opposition, with Williams and Hill absent at the time of the vote.

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