AUGUSTA – Maine employers will be getting some good news from the state in a few weeks.

Many will be seeing the taxes they pay to fund the state’s Unemployment Insurance System go down Jan. 1. Some will see significant reductions.

“There is about $398 million in the [Unemployment] Trust Fund,” said Mike Adams, an economist with the Department of Labor. “That’s enough to pay 19 months of benefits, and that is well above the 15-month reserve the Feds recommend we have.”

Adams estimated the overall reduction in taxes would be around $40 million, but he said it would be several weeks before a precise number is figured.

As part of the 1999 reform of the unemployment system, tax rates are based on employer use and other factors that must be computed for each employer. As a result, some businesses may see little, if any, decrease in rates while others may see a significant decrease.

Changes in the law have resulted in a “complete turnaround” of the fiscal health of the trust fund, said Laura Boyett, director of the Unemployment Compensation Bureau.

“The legislation not only changed the rates, it expanded the base on which the tax is figured,” she said. “Since January 1, 2000, unemployment taxes have been collected on the first $12,000 of wages an employee makes, up from the first $7,000.”

Boyett said that in 1999, before the law was changed, lawmakers were looking at a serious situation with much in doubt about the fund’s ability to pay benefits in a recession.

“That has totally changed,” she said. “We are in much better shape than many other states that are looking at tax increases because of the economy.”

While Maine has not seen a major increase in unemployment claims in recent weeks, there are significantly more Mainers getting help than a year ago. So far in 2001, about $80 million has been paid from the trust fund. That is up from $64 million at this point a year ago.

The highest payout in the fund’s history was in 1991 when unemployed workers got more than $180 million in benefits.

In the most recent week for which figures are available, 6,363 Mainers were receiving some level of unemployment benefits. Payments are based on what a person was earning before they were laid off, with a maximum payment of $272 per week for an individual with no dependents. There is an additional $10 a week added to the maximum per dependent.

In September, the average payment to those recipients with dependents was $207.

Peter Gore of the Maine State Chamber of Commerce said employers expected a decrease in rates because of the reforms passed in 1999, but not to this extent.

“It is good news,” Gore said. “But it’s not like employers will see profits go up. Even this is not enough to offset the increases in health insurance and workers’ comp [insurance] that are just really hurting businesses across the state.”

A major reason the business community went along with the reforms and the tax increases in 1999 was employers did not want to be hit with rising taxes during an economic downturn. They realized that strengthening the fund when times were good was the best route to go.

Ed Gorham, president of the Maine AFL-CIO said if the economy really “went sour,” lawmakers could step in to raise taxes well before the cash would run out to pay benefits to unemployed workers. He said the fund is ready to do what lawmakers wanted – provide a safety net to workers who lose their jobs.

“While these tax cuts will take effect, there is enough of a reserve to carry the fund through until the Legislature could act if needed to raise rates,” he said. “The fund is more healthy than it has been in a long, long time.”

Gorham said there still are issues of concern to workers as the economy worsens.

“We are hoping Congress will step in and provide extended benefits and address the critical issue of health insurance coverage for laid-off workers,” he said.

Gorham has long argued for a state expansion of benefits to cover part-time workers. There are proposals in Congress that would provide some benefits to such workers who are laid off, but no measures have been set.

Boyett said a wide range of proposals is pending before Congress, but none would require the state to provide matching funds.

“They all appear to be entirely federal,” she said, “and that will certainly help maintain the health of the state fund.”