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Panel schedules hearing to balance relief for employers with solvency of state trust fund.

COURTESY PHOTO - Acting Director David Gerstenfeld speaks about how the Oregon Employment Department has shaped a bill, which is up for a House committee hearing April 1, to defer payment of some unemployment payroll taxes and reset the target for tax collections for the unemployment trust fund.Oregon lawmakers will consider a bill to let some employers defer part of their unemployment payroll taxes until next year and pay a little less toward a reduced trust fund in future years.

House Bill 3389, which has bipartisan sponsorship, is scheduled by the House Rules Committee for a public hearing at 1 p.m. Thursday, April 1. The committee is not subject to legislative deadlines for advancing bills.

The bill was drafted with advice from the Oregon Employment Department, which oversees the state unemployment insurance trust fund — which comes from payroll taxes on employers — and state and federal unemployment benefits.

Acting Director David Gerstenfeld said officials recognize that some employers face big increases in payroll taxes because of employer layoffs during the pandemic-induced economic downturn last year.

"We know they need relief and want to do what we can to help," Gerstenfeld told reporters on a weekly conference call Wednesday, March 24. "We are happy to see a group of legislators introduce new legislation that is focused on providing even more tax relief to employers impacted by COVID-19."

One key provision would allow employers to defer payment of one-third of their 2021 payroll taxes until June 2022, if their rates increased by at least half a percentage point over 2020.

Among the bill's sponsors are Reps. Paul Holvey of Eugene and Daniel Bonham of The Dalles. Democrat Holvey is chairman and Bonham is the top Republican on the House Business and Labor Committee. Both also sit on the Rules Committee. Cosponsors include Sens. Chuck Riley, D-Hillsboro, and Bill Hansell, R-Athena, who hold the same positions on the relevant Senate committee.

"We continue to work with legislators and employer groups to protect the solvency of the unemployment insurance trust fund and to provide assistance to employers impacted by COVID-19," Gerstenfeld said.

"The bill has a number of provisions related to unemployment insurance taxes that takes different approaches at providing relief while protecting the solvency of the trust fund."

One provision would require the agency to plan its target for collection of payroll taxes for the trust fund on a 20-year basis instead of the current 10-year basis.

Gerstenfeld said the result would be a lower total for the trust fund, which started the current year-old downturn at $5 billion. (The agency has paid out a total of $8.3 billion in unemployment benefits during the past year, but much of that has come from federal funds.)

He said the reset was necessary because the run-up to the current recession lasted almost 10 years.

"That would mean the trust fund reserves would essentially forget that a recession had happened and increase the risk that we would not have enough reserves when a downturn took place," he said. "That provision is in there to make sure that does not happen going forward, and that we have more long-term solvency in the trust fund."

Oregon, unlike other states, did not borrow from the federal government to pay unemployment benefits during the Great Recession a decade ago. It does not anticipate borrowing from the federal government to pay benefits during the pandemic.

Another provision would base employers' experience ratings on 2020 rates for the next three years. Those 2020 rates were set before the pandemic. Employers usually pay more in tax rates if they lay off employees more frequently than in other businesses.

"Those (2020) ratings didn't have any of the pandemic experience in them," Gerstenfeld said. "This would be a way of not taking the pandemic experience into account when looking at the employer's experience rating. This is a recognition that the pandemic was not a typical situation and to try to take out the impact of the pandemic from influencing employers' experience ratings."

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