LAYOFFS TRIGGER RISE IN EMPLOYMENT TAXES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 9, 1992                   TAG: 9201090316
SECTION: BUSINESS                    PAGE: C5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium
LAYOFFS TRIGGER RISE IN EMPLOYMENT TAXES
Companies that cut their work forces to save money during hard times are finding their state employment tax is increasing.
About 44 percent of Virginia's approximately 130,000 employers will have to pay employment taxes at a higher rate this year than in 1991 because of recent job cuts, Ralph Cantrell, commissioner of the Virginia Employment Commission, said this week.
The amount of the increase will vary depending on the employment experience of the company.
Roanoke Electric Steel and the Ingersoll-Rand Rock Drill Division, two of many companies with layoffs last year, said they do not see the higher tax payment as a significant item.
About 38 employees of the steel company were off for four months until they were recalled in August, said Don Smith, chairman. "We have enjoyed a very low rate for years," without layoffs, he said. When layoffs occur, the VEC raises the rates. Others are still on layoff at the company's John Hancock joist plant in Salem.
Smith said he hopes business will improve this year, but he sees no signs of growth yet.
The added tax "will cost a little" at Ingersoll-Rand, where more than 115 are idle, said Ernest Hinck, vice president and general manager. Hinck hopes the new highway bill will bring more domestic drill business by the second quarter. Any earlier improvement will depend on actions by President Bush and the Federal Reserve, he said.
Cantrell of the VEC said each company's rate depends on its "experience rating" - a measure that balances how much the company has paid into the state's employment trust fund against how much its former employees have drawn from the fund in unemployment benefits.
In Virginia, unemployment taxes are paid by employers and not deducted from employee pay. Under state law, taxes to a company can range from $8 a year to $496 a year for each full-time employee, Cantrell said.
The fund, which is the sole source of regular payments made to unemployed workers, has been declining steadily from a peak of $745 million in August 1990 to $569 million this week, Cantrell said.
Despite the increase in the average tax rate, 72,000 of the state's employers will remain at the lowest tax rate. However, 6,000 others who were at the lowest rate last year had their rate increased Jan. 1, Cantrell said.
For all employees, the average rate this year will be 1.13 percent of each employee's first $8,000 in pay, or about $90 a year, up from 1 percent or $80 last year, he said. The number of companies paying the maximum rate jumped to almost 3,200 this year from less than 1,800 companies at that level in 1991, Cantrell said.

by Archana Subramaniam by CNB