Senate passes bill to unemployment extension, reduce unemployment insurance tax

Legislation passed today in the Senate keeps thousands of unemployed workers on extended unemployment benefits and temporarily reduces employers’ unemployment insurance (UI) taxes.

Senate Bill 5135 would provide immediate tax relief to 90 percent of employers around the state, totaling roughly $300 million in tax relief for businesses this year. It would also make a technical fix in state law that would make the State eligible for federally-funded extended benefits through 2011.

The legislation would come at a time when UI tax rates are set to increase by an average of 36 percent in 2011 and when nearly one in five Washingtonians is either unemployed or under-employed.


“Our workers and businesses are struggling,” said Sen. Jeanne Kohl-Welles, D-Seattle, chair of the Senate Labor, Commerce, & Consumer Protection Committee. “This bill ensures that 70,000 unemployed workers and their families will continue receiving or become eligible for extended benefits. It also provides much-needed relief to employers in our state — especially to those employers who have not laid off any workers during the peak of the Great Recession.”

In the latter part of 2008 and 2009, with unemployment rates rising, the state paid out significantly more in benefits than it collected in taxes, causing a dramatic increase in the 2010 and 2011 tax rates.

Senate Bill 5135, legislation requested by Gov. Chris Gregoire, is likely to be the first of two bills considered by the Legislature this year to reform UI. Future issues to be considered may include making Washington eligible for more federal funds an expansion of benefits and making the cap on UI taxes permanent.

The legislation now goes to the House of Representatives for consideration. In order for the tax cuts to take effect this year, the legislation must be passed by the full Legislature and signed by the governor by Feb. 8.