Maine Government News

Businesses expect to pay lower rates in 2014 and 2015

AUGUSTA—The Maine Department of Labor released the 2013 Unemployment Insurance Tax Rate Schedule Tuesday. Rates will remain at the Schedule F level, the same as in 2012.

Unemployment taxes are paid into the Maine Unemployment Trust Fund and are used solely to pay benefits to people who lose their jobs through no fault of their own. Administration of the unemployment insurance system is not supported by employer contributions paid into the Trust Fund. The cost of the program’s administration is entirely federally funded through grants to the state.

Maine’s job situation stabilized in 2011 and has had modest net growth in 2012. This has had the dual effect of reducing the number of people receiving unemployment while improving the overall health of the trust fund. If this pattern continues, unemployment tax rates will come down.

“The unemployment tax schedule is tracking closely to our projections. This is a positive sign that our economy is stabilizing. Therefore, we’re able to stay at the same schedule for the coming year. Based on the current trend, we project the unemployment tax rate to drop to a lower contribution schedule in 2014 and again in 2015,” announced Commissioner of Labor Jeanne Paquette.

“We are closely monitoring all economic developments,” she added.

Maine unemployment levels have declined over the last three years. The state’s unemployment rates remained below the national average throughout the recession and recovery. This, combined with a sound unemployment trust fund, enabled Maine to be one of just 14 states that avoided unemployment trust fund insolvency and the additional loan repayment and interest expense burden associated with borrowing from the federal government.

Since the start of the recession, 36 states have had to take out federal loans in order to pay unemployment claims. Twenty states still have outstanding loan balances. Employers in 19 states are paying higher federal unemployment taxes because of those states’ inability to repay their trust-fund loans within a specified timeframe. Several states floated bonds to pay off their debt, thereby shifting the debt burden to taxpayers.

“Maine is in a good position with regard to the stability of our unemployment trust fund. We are moving in the right direction—our tax rate has peaked, is now stabilizing and will begin coming down,” noted Commissioner Paquette.

Employers pay unemployment taxes on up to the first $12,000 in wages paid to each employee. Each business’ rate is based upon the business’ unemployment insurance experience, taxable wages and past contributions in relation to those of other businesses. The schedule for 2013 will set rates based on these factors within a range from a low of 0.89 percent to a high of 8.21 percent per $1,000 paid in wages. The minimum annual tax per employee paid at least $12,000 will be $106.80 and the maximum annual tax per employee will be $985.20. The average annual unemployment tax rate based on $12,000 paid per employee in 2013 will be $374.40. This will also be the rate assigned to a new employer who has not yet established an experience rate.

The Department of Labor administers Maine’s unemployment insurance system. Employers should receive their individual 2013 rate notices in mid to late December. Employers with questions about their 2012 or 2013 unemployment contributions should visit the department’s webpage on unemployment taxes at www.maine.gov/labor/unemployment/tax.html or call (207) 621-5120.

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