2006 Legislation
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HOUSE BILL NO. 578 – Employment security reserve tax


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Bill Status

H0578.......................................by COMMERCE AND HUMAN RESOURCES
EMPLOYMENT SECURITY RESERVE FUND - Amends existing law to provide that, for
calendar year 2006, the imposition of a reserve tax for the Employment
Security Reserve Fund shall not be precluded even if the balance of the
reserve fund exceeds forty-nine percent of the actual balance of the
Employment Security Fund.
02/08    House intro - 1st rdg - to printing
02/09    Rpt prt - to Com/HuRes
02/14    Rpt out - rec d/p - to 2nd rdg
02/15    2nd rdg - to 3rd rdg
02/21    3rd rdg - PASSED - 55-15-0
      AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bedke, Bell,
      Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon, Collins, Deal,
      Denney, Edmunson, Eskridge, Field(18), Field(23), Garrett, Harwood,
      Henbest, Jaquet, Kemp, Lake, LeFavour, Martinez, Mathews, McKague,
      Miller, Mitchell, Nielsen, Nonini, Pasley-Stuart, Pence, Ringo,
      Roberts, Rusche, Rydalch, Sali(Sali), Sayler, Schaefer, Shepherd(2),
      Shepherd(8), Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Trail,
      Wills, Wood, Mr. Speaker
      NAYS -- Barrett, Brackett, Chadderdon, Clark, Crow, Ellsworth, Hart,
      Henderson, Loertscher, McGeachin, Moyle, Raybould, Ring, Shirley,
      Absent and excused -- None
    Floor Sponsor - Schaefer
    Title apvd - to Senate
02/22    Senate intro - 1st rdg - to Com/HuRes
03/01    Rpt out - rec d/p - to 2nd rdg
03/02    2nd rdg - to 3rd rdg
03/07    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Cameron,
      Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
      Malepeai, Marley, McGee, McKenzie, Richardson, Schroeder, Stegner,
      Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Burtenshaw, Pearce
    Floor Sponsor - Cameron
    Title apvd - to House
03/08    To enrol
03/09    Rpt enrol - Sp signed
03/10    Pres signed
03/13    To Governor
03/14    Governor signed
         Session Law Chapter 48
         Effective: 01/01/06

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 578
  1                                        AN ACT
  5    Be It Enacted by the Legislature of the State of Idaho:
  6        SECTION 1.  That Section 72-1347A, Idaho Code, be, and the same is  hereby
  7    amended to read as follows:
  9    FUND. (1) There is established in the state treasury  a  special  trust  fund,
 10    separate  and  apart from all other public funds of this state, to be known as
 11    the employment security reserve fund, hereinafter "reserve  fund."  Except  as
 12    provided  herein,  all proceeds from the reserve tax defined in subsection (2)
 13    of this section shall be paid into the reserve fund. The moneys in the reserve
 14    fund may be used by the director for loans to the  employment  security  fund,
 15    section  72-1346, Idaho Code, as security for loans from the federal unemploy-
 16    ment insurance trust fund, and for  the  repayment  of  any  interest  bearing
 17    advances, including interest, made under title XII of the social security act,
 18    42  USC 1321 through 1324, and shall be available to the director for expendi-
 19    ture in accordance with the provisions of this section.  The  state  treasurer
 20    shall  be  the  custodian  of the reserve fund and shall invest said moneys in
 21    accordance with law. The state treasurer shall disburse the  moneys  from  the
 22    reserve fund in accordance with the directions of the director.
 23        (2)  A  reserve  tax  is  imposed on all covered employers required to pay
 24    contributions pursuant to section 72-1350, Idaho Code, except deficit  employ-
 25    ers  who  have  been  assigned a taxable wage rate from deficit rate class six
 26    pursuant to section 72-1350(8)(a), Idaho Code. The reserve tax  shall  be  due
 27    and  payable  at the same time and in the same manner as contributions. If the
 28    reserve fund is less than one percent (1%)  of  state  taxable  wages  in  the
 29    penultimate  year  as  of  September  30  of  the preceding calendar year, the
 30    reserve tax rate for all eligible, standard-rated and deficit employers  shall
 31    be  equal  to the taxable wage rate then in effect less the assigned contribu-
 32    tion rate and training tax rate. The provisions of this chapter which apply to
 33    the payment and collection of contributions also apply to the payment and col-
 34    lection of the reserve tax,  including  the  same  calculations,  assessments,
 35    method  of payment, penalties, interest, costs, liens, injunctive relief, col-
 36    lection procedures and refund procedures. In the administration of the  provi-
 37    sions  of  this section and the collection of the reserve tax, the director is
 38    granted all rights, authority, and prerogatives granted the director under the
 39    provisions of this chapter. Moneys collected from an  employer  delinquent  in
 40    paying  contributions and reserve taxes shall first be applied to pay any pen-
 41    alty and interest imposed pursuant to the provisions of this chapter and shall
 42    then be applied pro rata to pay delinquent  contributions  to  the  employment
 43    security  fund,  section  72-1346, Idaho Code, and delinquent reserve taxes to
  1    the reserve fund pursuant to this section. Any  interest  and  penalties  col-
  2    lected  pursuant  to  this  subsection shall be paid into the state employment
  3    security administrative and reimbursement fund, section 72-1348,  Idaho  Code,
  4    and any interest or penalties refunded under this subsection shall be paid out
  5    of  that  same fund. Reserve taxes paid pursuant to this subsection may not be
  6    deducted in whole or in part by any employer from the wages of individuals  in
  7    its  employ.  All reserve taxes collected pursuant to this subsection shall be
  8    deposited in the clearing account of the employment security    fund,  section
  9    72-1346,  Idaho  Code,  for  clearance  only and shall not become part of such
 10    fund. After clearance, the moneys shall  be  deposited  in  the  reserve  fund
 11    established in subsection (1) of this section. No reserve tax shall be imposed
 12    for  any  calendar year if, as of September 30 of the preceding calendar year,
 13    the balance of the reserve fund equals or exceeds  one  percent  (1%)  of  the
 14    state  taxable  wages for the penultimate calendar year, or exceeds forty-nine
 15    percent (49%) of the actual balance of the employment security  fund,  section
 16    72-1346,  Idaho  Code. Provided however, and not withstanding any other provi-
 17    sions of this subsection, for calendar year 2006, the imposition of a  reserve
 18    tax  shall  not  be  precluded even if the balance of the reserve fund exceeds
 19    forty-nine percent (49%) of the actual  balance  of  the  employment  security
 20    fund.
 21        (3)  The  interest  earned  from  investment  of the reserve fund shall be
 22    deposited in a fund established in the state treasurer's office, to  be  known
 23    as the department of commerce and labor special administration fund, hereinaf-
 24    ter  "special  administration  fund." The moneys in the special administration
 25    fund shall be held separate and apart from all  other  public  funds  of  this
 26    state.  The state treasurer shall be the custodian of this fund and may invest
 27    said moneys in accordance with law. Any interest earned on said  moneys  shall
 28    be  deposited in the special administration fund. In the absence of a specific
 29    appropriation, the moneys in the special administration fund  are  perpetually
 30    appropriated  to  the  director  and  may be expended with the approval of the
 31    advisory council appointed pursuant to section 72-1336, Idaho Code, for  costs
 32    related  to programs administered by the department. The director shall report
 33    annually to the joint finance-appropriations committee and the advisory  coun-
 34    cil the expenditures and disbursements made from the fund during the preceding
 35    fiscal  year, and the expenditures and disbursements and commitments made dur-
 36    ing the current fiscal year to date.
 37        (4)  Administrative costs related to the  reserve  fund  and  the  special
 38    administration  fund shall be paid from federal administrative grants received
 39    under title III of the social security act, to the extent permitted by federal
 40    law, and then from the special administration fund.
 41        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 42    declared to exist, this act shall be in full force and effect on and after its
 43    passage and approval, and retroactively to January 1, 2006.

Statement of Purpose / Fiscal Impact

                           STATEMENT OF PURPOSE


     This bill removes one of the conditions that prohibit the
deposit of 17 percent of employer unemployment insurance taxes into
the state-invested Employment Security Reserve Fund for calendar
year 2006.  This does not increase the amount employers must pay
under Idaho's Employment Security Law.  It simply eliminates the
requirement that the balance in the Employment Security Reserve
Fund must not exceed 49 percent of the balance in Idaho's
Washington, D.C., Trust Fund for money to be deposited into the
Reserve Fund instead of the Washington, D.C., Trust Fund for
calendar year 2006.  Both the Reserve Fund and the Washington,
D.C., Trust Fund are used to pay unemployment insurance benefits. 
But since the Reserve Fund is kept in Idaho and is invested by the
State Treasurer, the interest earned on its investment is deposited
in the Special Administration Fund and can be used to administer
Department programs.

     The bill has an emergency clause so one of the conditions on
the Reserve Fund can be removed retroactively to January 1, 2006.  

                          FISCAL  NOTE

     There is no impact on the state General Fund.  If enacted, the
bill will allow the Department to keep 17 percent of the
unemployment insurance taxes received in 2006 in the Reserve Fund
in Idaho.  That money would otherwise go to Idaho's Washington,
D.C., Trust Fund.  Interest earned on the Reserve Fund will
increase revenue to the Special Administration Fund, which will be
used to pay expenses incurred in the administration of the
Department's programs, including the Commerce Division's share of
indirect costs.  Without this amendment, the Commerce Division's
indirect costs would have to be paid from the state General Fund. 

Name:     Bob Fick
Agency:   Idaho Commerce & Labor
Phone:    332-3570 ext. 3628; 409-9818 cell

STATEMENT OF PURPOSE/FISCAL NOTE                              H 578