Expected slide in WA unemployment trust fund balance could trigger new tax

Washington's unemployment insurance fund faces a potential shortfall that could lead to a $700 million tax increase on businesses if its finances do not improve. Next year's benefit payouts are projected at $2. 4 billion, while employer contributions are expected to total only $1. 7 billion. Currently, the fund holds approximately $3.

8 billion, which translates to 7. 9 months of benefits, but this figure is predicted to decrease to 6. 3 months by 2027. If the fund dips below seven months, a solvency surcharge could be applied, raising an estimated $350 million annually from employers. Business representatives emphasize the need for legislative intervention to mitigate the impact of this potential tax.

Washington's unemployment rate remains stable at around 4. 5%, but economic conditions could shift the likelihood of needing the tax. Policymakers may consider lowering the trigger threshold for the solvency tax or extending the current waiver. The financial health of the unemployment fund reflects both increased claims and the repercussions of pandemic-era policies.