Governor Parnell Seeks Payroll Tax Relief for Alaskans
December 5, 2011, Juneau, Alaska – Governor Sean Parnell has directed Attorney General John Burns and Labor and Workforce Development Commissioner Click Bishop to review the Unemployment Insurance (UI) statutes and recommend statutory changes to provide relief for employers and employees when the UI fund is solvent. The request was made after the governor was informed that Alaska law mandates another payroll contribution increase from employers and employees for 2012. The Alaska UI Trust Fund had a balance of $234 million on September 30 and remains solvent.
This mandated tax increase is contrary to Governor Parnell’s aggressive efforts to lower taxes so that Alaskans can keep more of their own money rather than grow government coffers.
“It is ludicrous to require Alaskans to pay more for unemployment insurance when the UI fund is clearly solvent,” Governor Parnell said. “In these uncertain economic times, when people are already hard-pressed to make ends meet, I think it is wrong for government to pass on this unnecessary burden to Alaskans.”
The UI tax rate for Alaskan employers is determined by a formula in state law. The three determining factors in the formula are: the UI trust fund balance, the amount paid out in regular state unemployment benefits, and the amount of wages paid to employees of taxable employers. Alaska law mandates increased tax collections from employers and employees even when the trust fund is clearly solvent. In 2012, Alaska law mandates an additional $68 million will be collected from Alaska employers and employees, even though the UI Fund is to remain solvent without the increase.
“The State Unemployment Insurance laws as they currently exist provide no flexibility to help Alaskan employers and employees minimize or avoid a tax increase even though the unemployment insurance fund is at a healthy level,” Attorney General Burns said.
State and federal laws require a rate determination for the Alaska UI Trust Fund each year. Any statutory changes to the Alaska UI Trust Fund must ensure the future viability of the fund. Governor Parnell plans to work jointly with the Legislature to address this important issue for Alaskan employers and employees.
Governor Parnell has notified Alaska employers of his position on the scheduled rate increase. That letter is available at: