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Iowa employers to pay less in unemployment taxes

Published: Tuesday, Aug. 26, 2014 10:53 a.m. CDT

DES MOINES (AP) — Iowa employers will pay less in unemployment taxes in 2015 due to strong economic gains in the state, Gov. Terry Branstad said Monday.

Branstad announced that the average unemployment insurance tax rate will drop from 1.6 percent this year to 1.2 percent next year. That means thousands of employers will save money on their tax bills.

Branstad credited a growing economy and job creation efforts. The state’s unemployment trust fund, which holds unemployment tax payments, has $1.1 billion today, compared with about $446 million at the end of 2010. That is why the state can afford to lower the tax rate.

“The fact that we’ve have economic development success and we have many fewer people drawing unemployment benefits is the real reason why the trust fund has grown significantly over the past four years,” Branstad said

Iowa Workforce Development Director Teresa Wahlert said the agency has been working to modernize operations and has hired new fraud investigators.

The state’s workforce agency, which oversees unemployment benefits, has been under scrutiny recently. The Iowa Senate Government Oversight Committee will meet this week to review the management of Iowa Workforce Development.

Democratic Sen. Bill Dotzler, of Waterloo, has alleged that Wahlert has violated federal law that requires unemployment claims to be decided impartially. He has said that Wahlert demanded tallies on how often the judges rule in favor of employers and workers and requested the judges create tip sheets to help employers.

Agency spokeswoman Kerry Koonce has said Wahlert is not directly involved with claims and that the department will offer data to show that employers are not being favored.

In addition, internal agency emails provided to the committee show that earlier this year, the agency provided unemployment benefits to some people who didn’t seek them and staff was urged to stay quiet about what had happened. Wahlert said Monday that the amount paid in excess was small and that staffers were told to focus on doing their jobs.

Branstad said Wahlert has his full support.

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