HONOLULU -- A proposal to reduce a giant increase in unemployment taxes paid by Hawaii businesses is now law.

Gov. Linda Lingle signed into law Thursday a measure that shrinks the average tax hike businesses have to pay by about $400 per employee. Instead of a tax increase to $1,070 per employee annually, businesses will instead pay an average of $630 per employee. The legislation also adds $8 million to the tax burden of employers by keeping the average weekly unemployment benefit at a higher rate than current law.

"While this law helps businesses get some tax relief as they struggle to keep their doors open and retain their employees, it falls far short of what is needed to grow our economy," Lingle said in a statement.

This is still a large new tax burden on businesses, which paid an average of $90 per employee last year, but lawmakers said the tax increase was necessary to ensure that the state has enough savings to continue paying unemployment benefits to laid-off workers.

"I urge the Legislature to take up this matter next year and pass a bill similar to the one I proposed that would have saved employers $497 million and kept close to a half billion dollars in our local economy," Lingle said.

Hawaii's unemployment rate reached 6.9 percent in January, according to the state Department of Labor and Industrial Relations.