ARIZONA STATE SENATE
Phoenix, Arizona
FINAL
REVISED
unemployment insurance;
Indian tribes; training
An emergency measure conforming unemployment contribution requirements to federal laws and exempting certain employers from paying job training employer tax.
Background
On December 21, 2000, the Consolidated Appropriations Act (CAA) was passed by the U.S. Congress, which reduced Indian tribes’ obligation to pay employee benefits only to state governments and eliminated the obligation to the federal government. The act also allows eligible organizations, such as Indian tribes, the option of selecting payments instead of contributions to the unemployment trust fund. The language in H.B. 2151 conforms to federal laws contained in the CAA.
There are different ways that a company can be exempt from paying the job training employer tax. One is an employer can choose to make payments instead of contributions. Payments are made as reimbursements to the government after an employee collects unemployment. The amount of the reimbursement is equal to the amount of money drawn by the individual collecting unemployment. Contributions are based upon a set dollar amount per year, per employee. Also, businesses that have positive reserve ratios of 12 percent or higher, an assigned contribution rate of 2.7 percent or a negative reserve ratio qualify for the exemption.
Currently, the federal government has not repealed the Federal Unemployment Tax Act (FUTA), which maintains a two-tenths of one percent surcharge on unemployment taxes. Eligible businesses are exempt from paying one-tenth of one percent for job training tax in order to help defray costs from the federal surcharge of two-tenths of one percent imposed by FUTA. This bill bridges the gap between now and the time the FUTA is repealed by the federal government.
There is no fiscal impact associated with this bill according to the Department of Economic Security. On February 19, 2001, Arizona’s House of Representatives passed H.B. 2151 as a substitute to S. B. 1156 because the bills were identical. S. B. 1156 passed the Senate Banking and Insurance Committee by a vote of 5-0-1.
Provisions
1. Conforms Arizona statute to federal law contained in the CAA concerning Indian tribes’ right to make payments in lieu of contributions to the unemployment insurance trust fund.
2. Exempts eligible businesses from paying one-tenth of one percent for job training employer tax until the FUTA is repealed.
3. Contains an emergency clause.
House Action Senate Actin
CED 1/22/01 DPA 10-0-0-0 3rd Read 2/21/01 26-3-1-0
3rd Read 2/21/01 26-3-1-0
Signed by Governor 2/28/01
Chapter 3
Prepared by Senate Staff
June 29, 2001