Economy strong, Governor’s tax relief moves forward
Reduced unemployment insurance tax will continue in 2008

A significant reduction in Kansas’ unemployment insurance tax will continue in 2008 Governor Sebelius said today.

“The strength of our economy has allowed us to put more resources back into the hands of Kansas employers, allowing them to invest in their workforce and create new jobs,” Sebelius said.

According the 2007 Kansas Economic Report, the Kansas economy saw an increase of 20,500 jobs – the largest job growth since 1998; while the Kansas unemployment rate remained below the national average.

“This is a practical approach to tax relief that has benefited workers, businesses and communities while maintaining an important safety net for the unemployed,” Sebelius continued.

Last year, the governor directed the Employment Security Advisory Council to look for a way to reduce unemployment insurance taxes without jeopardizing the state’s Unemployment Insurance Trust Fund. The result was Senate Bill 83 which the governor signed into law in March of 2007. Estimated to save Kansas employers $81 million in the first year, those savings are expected to grow to more than $94 million in 2008.

“One of the provisions of the new law was that the health and integrity of Unemployment Insurance Trust Fund must remain intact for the tax relief to continue,” said Secretary of Labor, Jim Garner. “The Trust Fund is critical in helping to bridge that gap between workers seeking jobs and the new jobs being created each month.”

The Kansas Department of Labor evaluates the health of the Unemployment Insurance Trust Fund by determining the Average High Cost Multiple of the fund’s balance as of June 30th of each year. Under the new law, in order for the tax relief to continue on into the next year, that measurement must remain above 1.2. This year’s measurement provided a computation of 1.58, allowing the tax relief to carry on in 2008.

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