SALEM — The Oregon House voted 56-0 Thursday, April 15, in favor of tax cuts that will save employers an estimated $2.4 billion over the next decade, reforms triggered by the sharp rise in jobless claims during the pandemic.

The legislation makes a series of changes to how the state supports its unemployment insurance trust fund. Lawmakers say House Bill 3389 will blunt the impact of layoffs last year on what individual employers owe to the fund and take a more relaxed approach to keeping the fund solvent in the future.

“At the start of this session, we said that business relief would be a top priority so that we can recover lost jobs,” House minority leader Christine Drazan, R-Canby, said in a written statement after the legislation won approval Thursday. “Fixing the errors in our state’s unemployment benefits system is one way that we can provide relief to Oregonians.”

Though the bill had broad legislative support, work had been slowed by partisan divide over lawmakers’ priorities for this year’s session in Salem. Democrats and Republicans struck a deal April 14 to speed passage of new legislation.

Work on the unemployment insurance reforms began amid a steep rise in taxes for organizations that laid off workers in 2020. In Oregon, businesses that lay off the most workers pay higher taxes to keep the trust fund solvent.

That made sense in normal times — employers that draw the most from the state’s unemployment insurance fund pay the most to support it. But in 2020, the formula resulted in organizations hardest hit by the pandemic’s economic impact facing the biggest tax hikes.

The Oregon Employment Department forecast that 20% of the state’s employers would have to shoulder nearly all of a $183 million increase in unemployment taxes this year. And because the state allocates the impact of layoffs over a three-year period, those organizations would keep paying higher taxes over the next two years.

Employers reported tax bills rising by several hundred dollars per worker, jeopardizing their ability to recall staff after the pandemic and potentially putting Oregon’s economic recovery at risk.

Oregon’s trust fund has more money than any other state’s — $3.8 billion, despite the steepest, sharpest economic downturn in state history. So a bipartisan group of lawmakers drew up a series of reforms to blunt the impact of this year’s tax increases and reduce the overall tax burden in the future:

• Employers who faced a tax hike of at least 0.5 percentage points this year can defer up to a third of that bill until June 2022. And those facing higher increases can have a portion of that higher bill forgiven.

• Layoffs that took place in 2020 and 2021 won’t be used to calculate employers’ tax rates in the future. So there won’t be an ongoing penalty associated with pandemic-related layoffs.

• And Oregon will consider 20 years of economic history, rather than 10, when evaluating how much money the trust fund needs — and how much to tax employers to keep the fund solvent. Legislative analysts expect that using a longer time frame will result in a lower target for the trust fund balance, and lower employer taxes.

Legislative forecasts indicate employers will save $100 million in taxes this year and well over $2.4 billion over the next decade. The bill now moves to the Senate with the wind at its back.