In the darkest days of the COVID-19 pandemic, as unemployment soared higher than 20%, the state’s unemployment insurance fund ran out of money.

Rather than replenish it the usual way, by dramatically increasing the taxes employers pay to support the fund, the state borrowed money from the federal government and reduced the tax rate in 2021 and 2022.

That made sense; after all, employers as well as employees were hard-hit by the severe economic downturn. And because the unemployment tax system automatically sets rates based on a formula, the businesses would have been hit with the highest rate possible — Schedule H (on a scale from A to H) — at a time when they could least afford it.

Fast forward to today. The Unemployment Compensation Trust Fund (UCTF) is much stronger. The fund’s balance at the beginning of this month reached $366 million, nearing the target of $528 million, the sum deemed to be adequate for this year.

The economy is stronger, too. The state’s unemployment rate was 3.1% for May, its lowest level in two years. The state Department of Business, Economic Development and Tourism also predicts a stronger economy going forward.

Nonetheless, some side effects from the pandemic linger for employers. The artificially low tax rate no longer applies, and there’s still some catching up to do. Employers’ contributions have jumped two levels, from Schedule D in 2022 to Schedule F in 2023; that translates into an estimated increase of 46% in taxes this year.

While the actual amount varies by employer, it’s still a hefty tax burden. It’s unfortunate that the Legislature didn’t use this year’s session to consider a more gradual increase. The Grassroot Institute of Hawaii has called for a special session of the Legislature this year to provide relief.

However, given the current realities, a special session does not seem necessary. It’s essential that UCTF be brought back to fighting strength, to keep people solvent and the economy moving during downturns. While it may be painful for some businesses now, the payoff would come later, when the fund is healthier and contributions can be smaller. Indeed, a December report on the fund anticipates setting the rates at Schedule E for 2024.

There’s no guarantee of what Hawaii’s economy will look like in the coming years. Certainly, the Legislature should revisit this issue next session. But for now, it may be best to make hay while the sun shines.