S-1681.1                   _______________________________________________

                                                     SENATE BILL 5860

                              _______________________________________________

State of Washington                              53rd Legislature                             1993 Regular Session

By Senators Moore, Newhouse and Vognild

Read first time 02/18/93.  Referred to Committee on Labor & Commerce.

Adjusting the financing of unemployment insurance.

          AN ACT Relating to the financing of unemployment insurance; amending RCW 50.29.025 and 50.24.014; and creating a new section.

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

        Sec. 1.  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 interval of the fund balance ratio, expressed as a percentage, shall determine which tax schedule in subsection (5) 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

                           Fund Balance Ratio                                                                                                    Effective 

                           Expressed as a Percentage                                                                                       Tax Schedule

3.90 and above AA

                           3.40 ((and above)) to 3.89                                                                                                       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) 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) 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) 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) 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) of this section, within the tax schedule which is to be in effect during the rate year:

            ((Percent of

            Cumulative                                                                                             Schedule of Contribution 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

    5.01                      10.00              2                     0.48  0.78  1.18  1.68  2.08  2.68

   10.01                      15.00              3                     0.58  0.98  1.38  1.78  2.28  2.88

   15.01                      20.00              4                     0.78  1.18  1.58  1.98  2.48  3.08

   20.01                      25.00              5                     0.98  1.38  1.78  2.18  2.68  3.18

   25.01                      30.00              6                     1.18  1.58  1.98  2.38  2.78  3.28

   30.01                      35.00              7                     1.38  1.78  2.18  2.58  2.98  3.38

   35.01                      40.00              8                     1.58  1.98  2.38  2.78  3.18  3.58

   40.01                      45.00              9                     1.78  2.18  2.58  2.98  3.38  3.78

   45.01                      50.00            10                    1.98  2.38  2.78  3.18  3.58  3.98

   50.01                      55.00            11                    2.28  2.58  2.98  3.38  3.78  4.08

   55.01                      60.00            12                    2.48  2.78  3.18  3.58  3.98  4.28

   60.01                      65.00            13                    2.68  2.98  3.38  3.78  4.18  4.48

   65.01                      70.00            14                    2.88  3.18  3.58  3.98  4.38  4.68

   70.01                      75.00            15                    3.08  3.38  3.78  4.18  4.58  4.78

   75.01                      80.00            16                    3.28  3.58  3.98  4.38  4.68  4.88

   80.01                      85.00            17                    3.48  3.78  4.18  4.58  4.88  4.98

   85.01                      90.00            18                    3.88  4.18  4.58  4.88  4.98  5.18

   90.01                      95.00            19                    4.28  4.58  4.98  5.08  5.18  5.38

   95.01                     100.00            20                    5.40  5.40  5.40  5.40  5.40  5.40))

Percent of

Cumulative Schedule of Contribution Rates for

Taxable Payrolls Effective Tax Schedule

Rate

From   To   Class AA A B C

0.00 5.00   1 0.465 0.465 0.565 0.965

5.01 10.00   2 0.465 0.465 0.765 1.165

10.01 15.00   3 0.465 0.565 0.965 1.365

15.01 20.00   4 0.565 0.765 1.165 1.565

20.01 25.00   5 0.765 0.965 1.365 1.765

25.01 30.00   6 0.965 1.165 1.565 1.965

30.01 35.00   7 1.065 1.365 1.765 2.165

35.01 40.00   8 1.265 1.565 1.965 2.365

40.01 45.00   9 1.465 1.765 2.165 2.565

45.01 50.00 10 1.665 1.965 2.365 2.765

50.01 55.00 11 1.965 2.265 2.565 2.965

55.01 60.00 12 2.165 2.465 2.765 3.165

60.01 65.00 13 2.365 2.665 2.965 3.365

65.01 70.00 14 2.565 2.865 3.165 3.565

70.01 75.00 15 2.865 3.065 3.365 3.765

75.01 80.00 16 3.065 3.265 3.565 3.965

80.01 85.00 17 3.265 3.465 3.765 4.165

85.01 90.00 18 3.665 3.865 4.165 4.565

90.01 95.00 19 4.065 4.265 4.565 4.965

95.01 100.00 20 5.400 5.400 5.400 5.400

  Percent of

  Cumulative Schedule of Contribution Rates for

Taxable Payrolls Effective Tax Schedule

Rate

From   To   Class D E F

0.00 5.00   1 1.465 1.865 2.465

5.01 10.00   2 1.665 2.065 2.665

10.01 15.00   3 1.765 2.265 2.865

15.01 20.00   4 1.965 2.465 3.065

20.01 25.00   5 2.165 2.665 3.165

25.01 30.00   6 2.365 2.765 3.265

30.01 35.00   7 2.565 2.965 3.365

35.01 40.00   8 2.765 3.165 3.565

40.01 45.00   9 2.965 3.365 3.765

45.01 50.00 10 3.165 3.565 3.965

50.01 55.00 11 3.365 3.765 4.065

55.01 60.00 12 3.565 3.965 4.265

60.01 65.00 13 3.765 4.165 4.465

65.01 70.00 14 3.965 4.365 4.665

70.01 75.00 15 4.165 4.565 4.765

75.01 80.00 16 4.365 4.665 4.865

80.01 85.00 17 4.565 4.865 4.965

85.01 90.00 18 4.865 4.965 5.165

90.01 95.00 19 5.065 5.165 5.365

95.01 100.00 20 5.400 5.400 5.400

          (6) 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 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 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 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.

        Sec. 2.  RCW 50.24.014 and 1987 c 171 s 4 are each amended to read as follows:

          A separate and identifiable account to provide for the financing of special programs to assist the unemployed is established in the administrative contingency fund.  Contributions to this account shall accrue and become payable by each employer, except employers as described in RCW 50.44.010 and 50.44.030 who have properly elected to make payments in lieu of contributions, taxable local government employers as described in RCW 50.44.035, and those employers who are required to make payments in lieu of contributions, at ((the)) a basic rate of two one-hundredths of one percent.  The amount of wages subject to tax shall be determined under RCW 50.24.010.

Beginning with rate year 1994, this basic rate of two one-hundredths of one percent shall be increased by fifteen one-thousandths of one percent to a total rate of thirty-five one-thousandths of one percent.  The proceeds of this incremental fifteen one-thousandths of one percent rate shall be used solely to support the processing and payment of unemployment insurance claims.

          Contributions under this section shall become due and be paid by each employer under rules as the commissioner may prescribe, and shall not be deducted, in whole or in part, from the remuneration of individuals in the employ of the employer.  Any deduction in violation of this section is unlawful.

          In the payment of any contributions under this section, a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to one cent.

          If the commissioner determines that federal funding has been increased to provide financing for the services specified in chapter 50.62 RCW, the commissioner shall direct that collection of contributions under this section be terminated on the following January 1st.

If the commissioner determines that federal funding has been increased to provide adequate financing for the processing and payment of unemployment insurance claims, the commissioner shall direct that collection of the incremental fifteen one-thousandths of one percent be terminated on the following January 1st.

NEW SECTION. Sec. 3.  (1) There is hereby created a joint select committee on unemployment insurance composed of eight members as follows:

          (a) Four members of the senate, two from each of the major caucuses, to be appointed by the president of the senate; and

          (b) Four members of the house of representatives, two from each of the major caucuses, to be appointed by the speaker of the house of representatives.

          (2) The staff support shall be provided by the senate committee services and the office of program research as mutually agreed by the cochairs of the joint select committee.  The cochairs shall be designated by the committee.

          (3) The expenses of the committee members shall be paid by the legislature.

          (4) The committee shall study the financing and administration of unemployment insurance and any other related issues determined by the committee.

          (5) The committee shall report its findings to the legislature by December 31, 1993.

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