Private employers receive unemployment surcharge


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ST. THOMAS - Bills for an unemployment interest assessment surcharge - $25 per employee per year - have been sent out to private sector employers for the second year since legislation mandating the fee was passed.

The fee is designed to pay at least part of the interest on federal money the territory has been borrowing to pay unemployment benefits for out of work Virgin Islanders. It is in addition to the assessment V.I. businesses are traditionally charged for unemployment insurance.

The principle loan amount is up to about $80 million, V.I. Labor Commissioner Albert Bryan Jr. said.

Last year the interest payment was about $1.6 million, and was paid from the General Fund, Bryan said.

The $25 surcharge brings in about $500,000, according to Bryan.

"That $25 is just a token, it's doesn't even come close to the payment," he said.

While the fee will help pay the interest on the loan, to date, no money has been paid toward the principle.

"At some point we're going to have to pay all this money back to unemployment insurance," Bryan said.

Two years ago, the Legislature mandated the formation of the Unemployment Insurance Advisory Council to look at this problem and try to find solutions.

Bryan said the council includes union representatives and members of the chambers of commerce and has been meeting regularly for about a year. Sometime this month, the council will send a proposal to the Legislature, he said.

The V.I. Unemployment Trust Fund remained solvent until the recession hit in 2008 and unemployment claims rose by 75 percent. The amount of benefits disbursed roughly doubled, going from $6 million to $8 million a year to about $14 million.

The fund ran out of money in 2009, at which point the federal government offered interest-free loans to states and territories to pay unemployment claims. Those loans lasted for two years.

The federal government has continued to lend the territory money to pay unemployment, but the loan now accrues interest. Bryan said if the territory fails to pay the interest payments each year, it runs the risk of losing continued funding from the federal government.

While the territory is still borrowing, the amount has decreased.

At its peak, about six months after the HOVENSA refinery closed, the V.I. Labor Department was borrowing about $4.5 million a month. That number is now down to about $1 million.

This is largely because extended unemployment benefits have ended, and now benefits can only be collected for 26 weeks, Bryan said.

- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.

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