INDIANAPOLIS – House Democrats on Wednesday altered a bill aimed at delaying an unemployment insurance tax increase on businesses, adding provisions that expand unemployment eligibility and raise the maximum benefits.
Senate Bill 23 passed out of the House Labor and Employment Committee by a 7-2 party-line vote and now heads to the full House for consideration.
The measure is expected to end up in conference committee at the end of the session – a committee in which key players from both the House and Senate forge a final compromise.
The legislation passed after the committee chairman accidentally adjourned without taking a vote on the bill. Several GOP members of the committee – including Rep. Matt Bell, R-Avilla, and Rep. Dan Leonard, R-Huntington – left the room and refused to participate in a final vote, though they did vote against an amendment.
Generally, the GOP Senate is pushing for the delayed tax increase while the Democratic House is looking for some employee concessions. Since 2001, Indiana’s unemployment insurance trust fund had been paying out more in benefits than it has been receiving in taxes paid by employers.
It ran out of money in late 2008, forcing the state to borrow $1.6 billion from the federal government to pay claims.
A legislative fix passed last year included raising $315 million in new revenue from increased taxes on businesses in 2010.
But even with those increases, Indiana would continue borrowing from the federal government until 2015 and likely couldn’t pay off the loans until 2022.
Nevertheless, Republican leaders, including Gov. Mitch Daniels, believe a one-year delay in the tax increase is necessary for job creation and protection, because an additional tax would be a burden during the ongoing recession.
Wednesday’s amendment to the bill contained a number of new provisions, with two getting the most attention.
The first would make permanent changes to the state’s unemployment system to allow Indiana to draw down $148 million in one-time assistance from the federal stimulus program.
Under one of these changes, a person who quits a job to deal with a family illness or disability would qualify for unemployment benefits.
The second major provision would base the state’s maximum unemployment benefit on the state’s average weekly wage for the previous year.
Currently the maximum benefit is set at $390 a week, but the amended bill would let it fluctuate with wages, with a floor of $390 a week.
Under that formula, the current maximum benefit would rise to $406 a week.
“We’ve got to send a message of hope to the people of this state,” said the committee’s vice chairman, Rep. Chuck Moseley, D-Portage.
Josh Richardson, director of governmental affairs for the Indiana Department of Workforce Development, said these provisions collectively would cost an already insolvent fund an additional $120 million a year.
Most of the increase in cost would result from the permanent stimulus changes. But the one-time money would only cover the costs for a few years.
A representative for several unions testified in support, while business groups were cautious in their criticism.
“We need the delay,” said Ed Roberts, lobbyist for the Indiana Manufacturers Association. “The delay is still in here – we’re still for the bill.”
But Bell called Wednesday’s changes “horrible policy,” and Leonard said the amended bill “was an obvious no vote.”
