Topeka Employers in Kansas will pay $61 million less in taxes next year to finance benefits for unemployed workers, the state Department of Labor said Thursday.
A decrease in jobless claims triggered a Kansas law that automatically adjusts tax rates for employers when the need for revenues lessens, the department said. The average rate will drop to 3.15 percent from 3.48 percent of the first $8,000 of each worker's annual pay.
"Improvements in the Kansas economy will result in a lower tax bill for many Kansas employers in 2006," said Labor Secretary Jim Garner.
The reduction is good news because in recent years businesses have seen health care costs grow more quickly than unemployment costs, said Jim Gregory, a spokesman for the Kansas Chamber of Commerce.
"It's nice to see the momentum shift and go in the other direction," Gregory said. "That will reflect lower costs of doing business in Kansas."
However, Gregory said major tax issues remained for Kansas businesses, which often cite taxes as their biggest concern.
He noted that Gov. Kathleen Sebelius has proposed exempting new industrial and commercial equipment purchases from property taxes, a step toward phasing out such taxes on all equipment. The chamber supports the initiative.
Sebelius has said the tax break would spur business investment and economic development. But her administration also has said the state's economy already is improving.
Her administration has pointed to job growth as a sign of economic improvement and of the effectiveness of state efforts to stimulate economic development. For 20 consecutive months through November, the number of people holding nonfarm jobs each month has been higher than in the same month the previous year.
Also, the number of initial unemployment claims filed each month and the total number of Kansans receiving jobless benefits has decreased an average of about 15 percent, compared to 2004.
"This is the first time in several years that rates have declined," said Beth Martino, a Department of Labor spokeswoman. "It's definitely good news for Kansas employers. It's also excellent news as far as workers are concerned because it means we have fewer people drawing unemployment benefits."
State law sets a minimum balance for the trust fund that pays unemployment benefits, basing the amount on years with high payouts of jobless benefits. The state currently has $465 million in the trust fund.
The new tax rates will raise $281 million, the department said, compared to the $342 million raised this year.
Employers' tax rates are based on how many of their workers have sought unemployment benefits in the past. Rates range from 0.07 percent to 7.4 percent, the department said.