H-3613

AN ACT Relating to allocating employment security funds for the purposes of creating a state job training trust fund; amending RCW 50.29.025; adding new sections to chapter 50.16 RCW; adding new sections to chapter 50.24 RCW; adding a new section to chapter 28C.18 RCW; adding a new section to chapter 50.29 RCW; creating a new section; prescribing penalties; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 50.16 RCW to read as follows:

The employment security reserve fund is created in the custody of the state treasurer. All receipts from the reserve tax under section 2 of this act shall be deposited into the fund. The employment security reserve fund is not available for appropriation for any purpose other than the payment of unemployment benefits. Should the unemployment compensation trust fund have insufficient funds to meet benefit payment needs without requesting advances from the federal government, the necessary funds shall be transferred to the unemployment compensation trust fund. No payments may be made from the employment security reserve fund nor transfers made except through transfer to the unemployment compensation trust fund. Should the legislature appropriate funds from the employment security reserve fund inconsistent with federal requirements for the use of the unemployment compensation trust fund or with the mandate of this act, the entire balance in the employment security reserve fund shall be transferred immediately into the unemployment insurance trust fund. Only the commissioner or the commissioner's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

NEW SECTION. Sec. 2. A new section is added to chapter 50.24 RCW to read as follows:

(1) A reserve tax is imposed on all covered employers required to pay under RCW 50.24.010. The reserve tax is due and payable at the same time and in the same manner as contributions under this chapter. The reserve tax rate for all eligible, standard-rated and deficit employers shall be equal to the rate for each employer in the array, under RCW 50.29.025, specified in the following table for the rate class to which the employer has been assigned, as determined under RCW 50.29.025(5), within the tax schedule which is to be in effect during the rate year:

Percent of

Cumulative Schedules of Contributions Rates for

Taxable Payrolls Effective Tax Schedule

Rate

From To Class A B C D E F

0.00 5.00 1 0.096 0.116 0.196 0.296 0.376 0.496

5.01 10.00 2 0.096 0.156 0.236 0.336 0.416 0.536

10.01 15.00 3 0.116 0.196 0.276 0.356 0.456 0.576

15.01 20.00 4 0.156 0.236 0.316 0.396 0.496 0.616

20.01 25.00 5 0.196 0.276 0.356 0.436 0.536 0.636

25.01 30.00 6 0.236 0.316 0.396 0.476 0.556 0.656

30.01 35.00 7 0.276 0.356 0.436 0.516 0.596 0.676

35.01 40.00 8 0.316 0.396 0.476 0.556 0.636 0.716

40.01 45.00 9 0.356 0.436 0.516 0.596 0.676 0.756

45.01 50.00 10 0.396 0.476 0.556 0.636 0.716 0.796

50.01 55.00 11 0.456 0.516 0.596 0.676 0.756 0.816

55.01 60.00 12 0.496 0.556 0.636 0.716 0.796 0.856

60.01 65.00 13 0.536 0.596 0.676 0.756 0.836 0.896

65.01 70.00 14 0.576 0.636 0.716 0.796 0.876 0.936

70.01 75.00 15 0.616 0.676 0.756 0.836 0.916 0.956

75.01 80.00 16 0.656 0.716 0.796 0.876 0.936 0.976

80.01 85.00 17 0.696 0.756 0.836 0.916 0.976 0.996

85.01 90.00 18 0.776 0.836 0.916 0.976 0.996 1.036

90.01 95.00 19 0.856 0.916 0.996 1.016 1.036 1.076

95.01 100.00 20 0 0 0 0 0 0

(2) The contribution rate for each employer not qualified to be in the array shall be twenty-five percent of the contribution rate determined in RCW 50.29.025(7).

(3) The terms and conditions of the provisions of this title that apply to the payment and collection of contributions also apply to the payment and collection of the reserve tax imposed under this section. Moneys collected from an employer delinquent in paying reserve taxes shall first be applied to pay any penalty and interest imposed under the provisions of this title and shall then be applied pro rata to pay delinquent contributions to the employment security reserve fund created in section 1 of this act. Interest and penalties collected under this section shall be paid into the administrative contingency fund, and interest or penalties refunded under this subsection shall be paid out of the same fund. Reserve taxes paid under this section may not be deducted in whole or in part by any employer from the wages of individuals in its employ. Reserve taxes collected under this section shall be deposited into the employment security reserve account established in section 1 of this act. Except as to reserve taxes unpaid on the date on which they are due and payable, no reserve taxes may be collected or paid into the reserve fund during a calendar year if, as of December 31 of the preceding calendar year, the balance of the reserve fund equals or exceeds two percent of the total state contributions under this chapter for the preceding calendar year.

NEW SECTION. Sec. 3. A new section is added to chapter 50.24 RCW to read as follows:

(1) The employment security reserve fund balance ratio shall be determined by dividing the balance in the state reserve trust fund as of the June 30th immediately preceding the rate year by the total taxable wages paid by all employers subject to contributions during the second calendar year preceding the rate year and reported to the department by the following March 31st. The division shall be carried to the fourth decimal place with the remaining fraction, if any, disregarded. The fund balance ratio shall be expressed as a percentage.

(2) If the employment security reserve fund balance ratio, expressed as a percentage, exceeds two percent on June 30th, any amount in excess of two percent shall be transferred to the unemployment compensation trust fund.

NEW SECTION. Sec. 4. A new section is added to chapter 50.16 RCW to read as follows:

The state job training trust fund is created in the state treasury. All receipts from the interest earned from investment of the employment security reserve account moneys shall be deposited into the state job training trust fund. The purpose of the fund is to train and retrain adults who need to learn vocational skills in order to be gainfully employed. Expenditures from this fund may be used only for the purposes of sections 5 and 6 of this act. Only the state treasurer or the state treasurer's designee may authorize expenditures from the account and only in accordance with the directions of the work force training and education coordinating board in accordance with such rules as the work force training and education board may adopt. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

NEW SECTION. Sec. 5. A new section is added to chapter 28C.18 RCW to read as follows:

(1) The board shall give priority to funding training programs that are established specifically for the benefit of unemployed workers or workers who have received notice of long-term layoff or permanent unemployment. The purpose of the state job training trust fund is to train and retrain adults who need to learn vocational skills in order to be gainfully employed. Other programs may be funded as determined by the board in accordance with the board's duties as specified in RCW 28C.18.060(4).

(2) The board shall report annually to the legislature the expenditures and disbursements made from the state job training trust fund during the preceding calendar year, and the expenditures, disbursements, and commitments made during the current calendar year to date.

(3) The board may adopt rules necessary for the purposes of this section.

NEW SECTION. Sec. 6. A new section is added to chapter 50.16 RCW to read as follows:

Administrative costs for the collection of the reserve tax under section 2 of this act, and any penalties or interest thereon, shall be paid from the general fund until such time as the state job training trust fund established in section 4 of this act has sufficient moneys to cover the administrative costs, but in any event, no later than July 1, 1993. After July 1, 1993, those administrative costs shall be paid from the state job training trust fund. The state treasurer shall reimburse the general fund moneys paid under this section from the state job training trust fund.

Sec. 7. RCW 50.29.025 and 1990 c 245 s 7 are each amended to read as follows:

The contribution rate for each employer shall be determined under this section.

(1) A fund balance ratio shall be determined by dividing the balance in the unemployment compensation fund as of the June 30th immediately preceding the rate year by the total remuneration paid by all employers subject to contributions during the second calendar year preceding the rate year and reported to the department by the following March 31st. The division shall be carried to the fourth decimal place with the remaining fraction, if any, disregarded. The fund balance ratio shall be expressed as a percentage.

(2) The fund balance ratio, expressed as a percentage, shall be increased by 0.60 to determine the adjusted fund balance ratio. However, the increase for rate years 1993 and 1994 shall be 0.00 and for rate year 1995 shall be 0.40.

(3) The interval of the fund balance ratio, expressed as a percentage, shall determine which tax schedule in subsection ((~~(5)~~)) (6) of this section shall be in effect for assigning tax rates for the rate year. The intervals for determining the effective tax schedule shall be:

Interval of the Adjusted

Fund Balance Ratio Effective

Expressed as a Percentage Tax Schedule

3.40 and above A

2.90 to 3.39 B

2.40 to 2.89 C

1.90 to 2.39 D

1.40 to 1.89 E

Less than 1.40 F

((~~(3)~~)) (4) An array shall be prepared, listing all qualified employers in ascending order of their benefit ratios. The array shall show for each qualified employer: (a) Identification number; (b) benefit ratio; (c) taxable payrolls for the four calendar quarters immediately preceding the computation date and reported to the department by the cut-off date; (d) a cumulative total of taxable payrolls consisting of the employer's taxable payroll plus the taxable payrolls of all other employers preceding him or her in the array; and (e) the percentage equivalent of the cumulative total of taxable payrolls.

((~~(4)~~)) (5) Each employer in the array shall be assigned to one of twenty rate classes according to the percentage intervals of cumulative taxable payrolls set forth in subsection ((~~(5)~~)) (6) of this section: PROVIDED, That if an employer's taxable payroll falls within two or more rate classes, the employer and any other employer with the same benefit ratio shall be assigned to the lowest rate class which includes any portion of the employer's taxable payroll.

((~~(5)~~)) (6) The contribution rate for each employer in the array shall be the rate specified in the following table for the rate class to which he or she has been assigned, as determined under subsection ((~~(4)~~)) (5) of this section, within the tax schedule which is to be in effect during the rate year:

Percent of

Cumulative Schedules of Contributions Rates for

Taxable Payrolls Effective Tax Schedule

Rate

From To Class A B C D E F

0.00 5.00 1 ((~~0.48 0.58 0.98 1.48 1.88 2.48~~))

0.384 0.464 0.784 1.184 1.504 1.984

5.01 10.00 2 ((~~0.48 0.78 1.18 1.68 2.08 2.68~~))

0.384 0.624 0.944 1.344 1.664 2.144

10.01 15.00 3 ((~~0.58 0.98 1.38 1.78 2.28 2.88~~))

0.464 0.784 1.104 1.424 1.824 2.304

15.01 20.00 4 ((~~0.78 1.18 1.58 1.98 2.48 3.08~~))

0.624 0.944 1.264 1.584 1.984 2.464

20.01 25.00 5 ((~~0.98 1.38 1.78 2.18 2.68 3.18~~))

0.784 1.104 1.424 1.744 2.144 2.544

25.01 30.00 6 ((~~1.18 1.58 1.98 2.38 2.78 3.28~~))

0.944 1.264 1.584 1.904 2.224 2.624

30.01 35.00 7 ((~~1.38 1.78 2.18 2.58 2.98 3.38~~))

1.104 1.424 1.744 2.064 2.384 2.704

35.01 40.00 8 ((~~1.58 1.98 2.38 2.78 3.18 3.58~~))

1.264 1.584 1.904 2.224 2.544 2.864

40.01 45.00 9 ((~~1.78 2.18 2.58 2.98 3.38 3.78~~))

1.424 1.744 2.064 2.384 2.704 3.024

45.01 50.00 10 ((~~1.98 2.38 2.78 3.18 3.58 3.98~~))

1.584 1.904 2.224 2.544 2.864 3.184

50.01 55.00 11 ((~~2.28 2.58 2.98 3.38 3.78 4.08~~))

1.824 2.064 2.384 2.704 3.024 3.264

55.01 60.00 12 ((~~2.48 2.78 3.18 3.58 3.98 4.28~~))

1.984 2.224 2.544 2.864 3.184 3.424

60.01 65.00 13 ((~~2.68 2.98 3.38 3.78 4.18 4.48~~))

2.144 2.384 2.704 3.024 3.344 3.584

65.01 70.00 14 ((~~2.88 3.18 3.58 3.98 4.38 4.68~~))

2.304 2.544 2.864 3.184 3.504 3.744

70.01 75.00 15 ((~~3.08 3.38 3.78 4.18 4.58 4.78~~))

2.464 2.704 3.024 3.344 3.664 3.824

75.01 80.00 16 ((~~3.28 3.58 3.98 4.38 4.68 4.88~~))

2.624 2.864 3.184 3.504 3.744 3.904

80.01 85.00 17 ((~~3.48 3.78 4.18 4.58 4.88 4.98~~))

2.784 3.024 3.344 3.664 3.904 3.984

85.01 90.00 18 ((~~3.88 4.18 4.58 4.88 4.98 5.18~~))

3.104 3.344 3.664 3.904 3.984 4.144

90.01 95.00 19 ((~~4.28 4.58 4.98 5.08 5.18 5.38~~))

3.424 3.664 3.984 4.064 4.144 4.304

95.01 100.00 20 5.40 5.40 5.40 5.40 5.40 5.40

((~~(6)~~)) (7) The contribution rate for each employer not qualified to be in the array shall be as follows:

(a) Employers who do not meet the definition of "qualified employer" by reason of failure to pay contributions when due shall be assigned the contribution rate of ((~~five and four-tenths~~)) four and thirty-two one-hundredths percent, except employers who have an approved agency-deferred payment contract by September 30 of the previous rate year. If any employer with an approved agency-deferred payment contract fails to make any one of the succeeding deferred payments or fails to submit any succeeding tax report and payment in a timely manner, the employer's tax rate shall immediately revert to ((~~five and four-tenths~~)) four and forty-two one-hundredths percent for the current rate year;

(b) The contribution rate for employers exempt as of December 31, 1989, who are newly covered under the section 78, chapter 380, Laws of 1989 amendment to RCW 50.04.150 and not yet qualified to be in the array shall be ((~~2.5~~)) 2.0 percent for employers whose standard industrial code is "013", "016", "017", "018", "019", "021", or "081"; and

(c) For all other employers not qualified to be in the array, the contribution rate shall be a rate equal to the average industry rate as determined by the commissioner; however, the rate may not be less than one percent. Assignment of employers by the commissioner to industrial classification, for purposes of this subsection, shall be in accordance with established classification practices found in the "Standard Industrial Classification Manual" issued by the federal office of management and budget to the third digit provided in the Standard Industrial Classification code.

NEW SECTION. Sec. 8. A new section is added to chapter 50.29 RCW to read as follows:

For the purpose of simplification of employer reports, the "combined contribution rate" shall be used in the calculation of employer taxes. The combined contribution rate shall include the regular contribution rate as determined in RCW 50.29.025, the reserve tax contribution rate as determined in section 2 of this act, and the special contribution rate required under RCW 50.24.014. No mention of the "combined contribution rate" can be made on any tax form or publication unless the form or publication specifically identifies the specific contributions. No combined contribution rate may be quoted on a form unless the specific component rates are also quoted. The sole purpose of the combined contribution rate is to allow an employer to perform a single calculation on a tax return rather than three separate calculations.

NEW SECTION. Sec. 9. If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state or the eligibility of employers in this state for federal unemployment tax credits, the conflicting part of this act is hereby declared to be inoperative solely to the extent of the conflict, and such finding or determination shall not affect the operation of the remainder of this act. The rules under this act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the state or the granting of federal unemployment tax credits to employers in this state.

NEW SECTION. Sec. 10. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 11. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.