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

Washington's unemployment insurance fund faces a potential crisis, with a projected tax increase of $700 million looming over businesses if financial conditions do not improve. Currently at $3. 8 billion, the fund is expected to drop to 7. 1 months of benefits by next year, triggering a solvency tax if it falls below seven months. This tax could cost employers an estimated $350 million annually, raising concerns about business affordability.

James Crandall from the Association of Washington Business urged the Employment Security Department to take proactive measures to address the looming tax. Lawmakers have options, including adjusting the tax threshold or extending the existing waiver, but these are short-term fixes. The state must also grapple with policy decisions made during the COVID-19 pandemic affecting the fund's long-term viability. With unemployment stable at approximately 4. 5%, the economic outlook remains uncertain.

A recession or unexpected growth could significantly influence the necessity for this tax.