Crediting a cruising economy and lower than usual unemployment claims, next year’s unemployment insurance tax rate for South Carolina businesses will dip another 34%, Gov. Henry McMaster and the state’s workforce director Dan Ellzey announced Thursday.
Even more good news, the two told reporters, they also announced that the state’s unemployment trust fund is now solvent, for the first time since 2003. That means the amount in the trust fund is enough to withstand any new recession similar to the last three recessions, according to a news release.
McMaster’s news signals the end of a lingering recession-era problem for the state, as unemployment insurance tax rates have continued to drop since 2013.
During the recession, the state had to borrow nearly $1 billion from the federal government just to provide unemployment benefits to South Carolinians. Though the loan was paid off early in 2015 as the economy continued to do well, the General Assembly adopted regulations requiring the state’s Department of Employment and Workforce to build back up the trust fund in five years.
“The best news for these good times is that the trust fund is now prepared to withstand a recession,” Ellzey said in a statement. “With more than 2.31 million South Carolinians working and the unemployment rate at 2.9%, these cuts are a welcomed incentive for businesses wanting to expand in this vibrant economy.”
Notices will be sent Friday to 120,000 businesses, which next year could pay nearly $4,500 less in unemployment taxes, depending on the size of the business, compared to what that business paid in the current year. Those tax rates are calculated from a combination of the business’ number of employees and the tax bracket the business is in. New businesses also would qualify for the smaller tax rate.
McMaster said South Carolina is “dedicated to making it appealing for companies” to create jobs and invest in the state. “The 2020 savings are a direct result of the growing economy and the support of the business community.”