Employers' V.I. Unemployment Insurance Fund contributions will increase from zero to 1.5 percent of payroll, that of new employers will double to 2 percent and both will pay $25 annually per employee for Unemployment Insurance debt, if a measure before the Senate becomes law.
The Senate Rules and Judiciary Committee Friday sent the bill [Bill 29-0231] to the full Senate for a final vote while considering budget bills.
The changes are needed to fund unemployment insurance and stem a growing debt burden as the territory is forced to borrow money to pay unemployment insurance to V.I. workers.
Rising unemployment in the territory has led to an increase in unemployment claims, forcing the territory to borrow from the federal government to pay beneficiaries, Labor Department officials testified in previous hearings.
The problem began back in 2001, when the Unemployment Insurance Trust Fund had a substantial surplus. That year the Legislature voted to reduce the minimum tax rate to 0 percent and the new employer rate to 1.5 percent – changes that did not impact the trust fund while the economy was doing well.
The fund remained solvent until about 2008 when the recession increased claims and payables by 75 percent, according to the Labor Department.
The territory pays for the first 26 weeks of unemployment insurance with the federal government covering the rest, but with rising unemployment, the territory's share is rapidly increasing
The balance on the trust fund loan is $39 million, with an interest payment of $966,000 due in September, according to the Labor Department. The increased contributions are needed to bring funding into the system closer to the amount the territory has to pay out.
Doctors and health practitioners will have to include their credentials when advertising, and post them in their offices, with penalties for false or misleading advertising, if another bill approved in Rules Friday becomes law. [Bill 0235]
Both measures are before the Legislature in session scheduled for Monday and Tuesday.