Unemployment insurance (UI), the long-term care (LTC) program, and the paid family and medical leave (PFML) program are all funded by payroll taxes. UI and PFML payroll taxes increased this year, and the LTC payroll tax briefly went into effect for the first time. There has been significant legislative action on all three this session, but the supplemental operating budget proposals from the Senate Ways & Means chair and the House Appropriations chair are fairly quiet on them.

First, earlier this month, the Senate passed ESSB 5873, which would reduce UI taxes for 2022 and 2023. This is estimated to reduce taxes by $214.0 million in 2021–23. The Senate budget does not use general fund money to backfill this amount; instead, the UI trust fund balance would be reduced. The House has not yet passed the bill, and the House chair’s budget proposal doesn’t mention it.

Second, the Legislature acted early this session to delay the LTC program. The Senate chair’s budget would provide the state actuary $503,000 from the general fund–state (GFS) for actuarial support of the LTC program, “including an actuarial audit and valuation of the long-term services and supports trust fund that incorporates the impact of the exemptions granted by the employment security department.”

In the House chair’s budget, the long-term services and supports trust commission would be required to develop options for

• allowing vested individuals who move out of Washington to access benefits,
• ensuring that individuals who opted out of the program by buying private insurance maintain that insurance going forward, and
• allowing workers who are exempt because they have private insurance permanently re-enter the state program.

Third, at the Feb. 11 meeting of the PFML advisory committee, the Employment Security Department (ESD) said that it planned to ask the Legislature for $350 million this biennium to serve as a reserve that could cover any cash deficit. (See this post for more on the PFML financial troubles.) The $350 million does not include the estimated amount that would be required to avoid a solvency surcharge next year—that would be another $397 million.

The Senate has passed 2SSB 5649, which would add various actuarial requirements to the PFML program. The Senate chair’s budget would fund the bill’s implementation. Additionally, the Senate chair’s budget would appropriate $350.0 million from the GFS to the family and medical leave insurance (FMLI) account, but it could only be spent to the extent that it is necessary to keep the FMLI account out of deficit. Further, the Senate chair’s budget specifies that any GFS money in the FMLI account must be excluded from the solvency surcharge calculation (which is based on the account balance).

The House chair’s budget would appropriate $100,000 from the GFS for ESD to contract for an actuarial analysis of the PFML program. It would have to include:

• a spending plan for the program, including a forecast of premiums collected, benefits paid, and premium rates,
• a summary of program beneficiary demographics, and
• data on claimants’ use of other sources of paid leave.

The House chair’s budget would appropriate $397.0 million from the GFS to the FMLI account. It could be used only as “necessary to manage the account balance in order to minimize the likelihood of a premium surcharge” in CY 2023.

(Previous posts on the budget proposals are here.)