Dayton Daily News...
Payroll tax hike, higher unemployment insurance planned for 2012
Ohio companies to pay $21 more per worker to repay Fed loan
by Randy Tucker  

October 6, 2011 

Ohio employers in 2012 will pay an extra $21 per worker per year in unemployment insurance taxes as the federal government begins to reclaim money it loaned to the state to pay benefits to laid-off workers. 

The government will reduce by 0.3 percent the credit used to offset federal unemployment taxes and apply the gain to Ohio’s loan balance of $2.3 billion, said Ben Johnson, a spokesman for the Ohio Department of Job and Family Services. 

“It’s an increase in federal taxes,” Johnson said. “Ohio is not raising unemployment taxes.” 

The surcharge was triggered by the state unemployment trust fund’s continued insolvency. 

Ohio is among 27 states that owe the federal government a combined $38 billion, and the feds plan to levy tax hikes on employers in those states until the federal dollars are repaid. 

That could mean an additional 0.3 percent cut in the unemployment tax credit each year until Ohio’s loans are retired, according to Johnson. 

Record unemployment during the recession drained payroll taxes collected by the states’ unemployment trust funds, forcing them to borrow money from the federal government to continue paying benefits. 

Ohio’s unemployment loan balance hit a peak of $2.6 billion in September, Johnson said, including a $300 million zero-interest loan that was repaid last month. 

States with outstanding balances were required to begin making interest payments by Friday, and Ohio made its initial $70 million interest payment with unspent tobacco settlement money used to create an unemployment compensation contingency fund, Johnson said. That left a balance of $33.3 million in the contingency fund, which “will not fully cover the expected interest payment for next year,” he said. 

Read it at the Dayton Daily News