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Hawaii Senate Committees Pass UI Tax Relief Bill

State Capitol

On Friday, February 26, 2010, HB 2169 HD2, which gives employers a two-year reduction in unemployment insurance (“UI”) taxes, was heard by the Senate Labor (“LBR”) and Ways and Means (“WAM”) committees. The committees approved the bill and suggested no amendments.

LBR Chair Dwight Takamine expressed concern about giving employers two years of relief when the Legislature usually granted employers only one year of help in the past. Despite his concerns, he voted to pass the bill out of his committee but did so with reservations.

WAM Chair Donna Mercado Kim acknowledged HB 2169 HD2 was not a “perfect” bill, but recognized that employers must receive immediate assistance to lower the UI tax burden so that more individuals can remain employed. She explained that the Legislature may need to revisit this UI tax issue in future legislative sessions, but that the measure in its current form needed to move out of committee now in order to meet the Administration’s March 12, 2010 deadline and to help employers.

The bill must be approved by the full Senate before the measure is sent to Governor Lingle for final approval.

HB 2169 HD2 lowers employers’ UI taxes for 2010 and 2011 by:

  • Amending employers’ contribution schedule for 2010 to schedule D (currently, schedule F) and for 2011 to schedule F (currently, schedule H).
  • Lowering the taxable wage base to 90% for 2010 and 2011.
  • Decreasing the adequate reserve rate to the amount that is equal to the benefit cost rate multiplied by the total remuneration (instead of 1.5 times this amount).

HB 2169 HD2 also allows UI claimants to collect higher UI benefits for 2011. Under current law, the maximum weekly benefit amount is 75% of the average weekly wage for 2010 and 70% of the average weekly wage for 2011 and beyond. However, HB 2169 HD2 extends the 75% maximum weekly benefit amount through the end of 2011 so that the 70% maximum would be reinstated beginning January 1, 2012.

The following table [click here] illustrates HB 2169 HD2’s impact on employers’ UI taxes. A more detailed analysis can be found on the DLIR’s website at http://hawaii.gov/labor/reports/ui_tax_2-24-10.pdf.