Members of the Employment Security Council rejected Gov. Jim Gibbons’ recommendation to lower the tax from an average 1.33 percent to 1 percent for 2010.
The rate is adjusted each year. Cindy Jones, employment security administrator, said public hearings will be held before she makes a final determination by the end of the year.
Gibbons last week recommended reducing the tax that is paid by employers on the first $27,000 in wages. The first-term Republican governor said lowering the levy on businesses would help the state retain jobs and create new ones by luring companies from elsewhere.
But representatives of business groups who spoke at Tuesday’s meeting urged keeping the rate the same, noting that eventually money borrowed from the federal government will have to be paid back, possibly with interest.
“I think it would be a mistake to lower the rate,” said Danny Thompson, secretary-treasurer of the Nevada AFL-CIO. “Clearly we have not hit bottom yet. The end of this year I fear is going to be bleak.”
Officials with the Nevada Department of Employment, Training and Rehabilitation gave a somber assessment of the state’s current economy and uncertain future. Beginning this month, Nevada will have to borrow about $100 million a month through next year to meet unemployment benefit obligations.
Bill Anderson, chief economist for the agency, said the “unprecedented nature” of current economic conditions make it difficult to predict when Nevada’s economy will begin to improve.
Since 2007, Nevada has lost 120,000 jobs, most within the leisure and hospitality and construction industries, which fueled the state’s rapid growth before the recession.
Anderson said the housing crisis, tightened credit markets that choked commercial development, and weak consumer spending has dealt Nevada a triple whammy that will be difficult to emerge from.
“That’s the lifeblood of Nevada’s economy,” he said.
Nevada’s unemployment rate in August hit a record 13.2 percent, the second highest in the nation. Anderson predicted the jobless rate could climb above 14 percent in 2010, before the economy begins to stabilize in 2011.
“We’ve yet to see any real sign that labor markets are about to improve,” he said.
The federal stimulus bill provides states with interest-free loans for unemployment claims through 2010. After that, the law provides for an interest rate of 4.6 percent on any outstanding loan balances.