DEW: SC businesses to likely see tax decrease
COLUMBIA, S.C. (AP) — South Carolina's unemployment agency may pay $150 million less in benefits this year by clamping down on who qualifies, officials said Tuesday.
Employers' tax rates for unemployment insurance should go down for 2013, not up as believed by a senator highly critical of the agency, said Laura Robinson, assistant director of the Department of Employment and Workforce.
The agency is on track to pay as little as $300 million in benefits this year to jobless workers, compared to roughly $450 million last year, according to the agency.
The drop comes despite the state's stubbornly high jobless rate, which was 9.6 percent in July. The rate dipped to a four-year-low of 8.8 percent in April before rising again for three consecutive months.
Robinson attributed the reduced rates to internal policy changes and a new law, implemented in July, requiring the agency to deny all benefits to workers fired for misconduct. The policy implemented in April limits workers fired for other, non-deliberative reasons to a maximum of four weeks of payments.
Last year, fired workers received $50 million in benefits. That compares to $12.3 million for the first half of 2012. The third quarter's tally should be less than $4 million, Robinson said, noting just $1 million went to fired workers in August.
Robinson was making her second appearance in two months before a Senate Labor Commerce and Industry subcommittee.
Its chairman, Sen. Kevin Bryant, continues to accuse the agency of not abiding by the law and believes rates will go up. His accusations are based on decisions made in the first week of the law's implementation.
"If taxes do go down, I'd love to come before this committee and say, 'I was wrong,'" said Bryant, R-Anderson, who says he's frustrated by a lack of response from DEW. "Twelve million is much better than 50. It's headed in the right direction."
Last month, Bryant questioned why 66 fired workers were awarded the maximum 20 weeks of benefits in the law's first week. Bryant pulled those cases among 518 files the agency sent him for July 9-13. The actual number of fired workers who received full benefits during that period is lower, although it's not known by how much.
DEW Director Abraham Turner acknowledged last month that mistakes were made during that first week but were being corrected. Robinson said Tuesday she's happy with the results of worker training.
Bryant had intended to go through his list of contested cases Tuesday.
But a warning from the Department of Labor shut that down. In a letter Monday to DEW, the federal agency's unemployment insurance division raised concerns about legislators influencing the outcome of cases still going through the appeals process. Such perceived influence could expose the state to lawsuits, Bryant said in explaining the letter.
Once cases are closed, the panel should be able to review them, according to a Senate attorney.
Sen. Shane Massey, R-Edgefield, said he expects to do so.
"Looking at closed cases seems to be the only way we could know the law is being implemented as intended," he said.
Senators spent the bulk of the meeting discussing the agency's definitions of inefficiency, inability and incapacity — reasons for firing workers that, under the law, still allow them to receive some benefits.
Legislators' criticism stems from the agency's debt. It had to borrow nearly $1 billion from the federal government between December 2008 and spring 2011 to keep sending checks amid jobless rates that hit a high of 12 percent in late 2009.
Also contributing to the depleted trust fund were agency management problems and legislative inaction on employers' unemployment insurance tax rates, which remained unchanged from January 2004 through December 2010, during a time the jobless rate doubled.
In 2010, legislators approved a law that overhauled the former Employment Security Commission and made it a Cabinet agency, plus included a plan for paying back the federal government by 2015. That called for employers' rates to increase, and those with the worst records of letting workers go paying the most.
Facing a backlash from businesses, lawmakers have since kept rates down by tweaking who's eligible and, for the second consecutive year, designating relief in the budget. Legislators included $77 million in unemployment tax relief in their 2012-13 budget. Businesses should receive revised 2012 tax notices this month. They can choose to either apply the 12 percent savings to 2013 as a credit, or get a rebate in the mail.
Their 2013 tax notices should go out in November. Rather than increase under the repayment plan, the rates should be about the same as the lowered, revised rates for 2012 that go out this month, according to the agency.
The agency still owes the federal government $675 million, following a recent payment of $106.5 million.
"I think we've come a long way with DEW," said retiring Senate LCI Chairman Greg Ryberg, R-Aiken, likening the former agency to the "wild, wild West." ''We've made some very, very positive changes. Sometimes there is frustration as to the speed of the change."