House backs cut in jobless benefit

The Arkansas House passed a bill Thursday that would reduce the amount of time a person may receive unemployment insurance from four months to three.

House Bill 1430 by Rep. Robin Lundstrum, R- Elm Springs, passed 79-15.

The bill also would reduce taxes on employers that are used to fund unemployment insurance.

Lundstrum said her bill was needed to attract employers to Arkansas and encourage Arkansans receiving unemployment benefits to return to work.

Rep. Andrew Collins, D-Little Rock, asked if the bill would reduce Arkansas to the lowest number of weeks of unemployment offered in the nation.

Lundstrum said many states are reducing unemployment benefits but noted she wasn’t aware of any that offered fewer than three months of unemployment. Across Arkansas, Lundstrum said people on unemployment benefits return to work on average after 11 weeks.

The legislation would drop the state’s new employer tax from 2.9% to 1.9%. It also would cut the unemployment tax stabilization rate from 0.20% to 0.125% in fiscal 2024. In fiscal year 2025, the stabilization rate would drop to 0.1%.

The bill also would reduce the assessed penalty rate on employers who fail to make unemployment-related payments on time from 14% to 10%.

Arkansas unemployment insurance tax rates range from 0.1% to 5.0%, plus the stabilization rate in effect for the current year. The tax is computed on the wages paid to each employee on a calendar quarter basis, according to the Division of Workforce Services website.

The measure would represent a tax cut of $31 million, Lundstrum said during a committee hearing on the bill. The bill would affect the state’s Unemployment Insurance Trust Fund, which Lundstrum said “is extremely healthy,” but would not affect the state’s general revenue.