House OKs jobless fund changes
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House Speaker Shap Smith |
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By Peter Hirschfeld Vermont Press Bureau - Published: May 6, 2010
MONTPELIER — House lawmakers gave grudging approval Wednesday to an unemployment reform package that will, supporters say, eliminate the deficit in Vermont's jobless fund by 2015.
The lopsided vote – there were only nine dissenting votes in the 150-member body – obscured deep concerns among labor-friendly Democrats over a bipartisan compromise that includes reductions in benefits to out-of-work Vermonters.
House Speaker Shap Smith told his caucus that he too dislikes provisions that will institute a one-week waiting period for the newly unemployed and make it more difficult for jobless residents to supplement their benefit checks with part-time work. But the scope of the unemployment fiasco, and its potential effect on all workers, according to Smith, demanded some unpalatable concessions during weeks-long negotiations with the Douglas Administration.
"In my time as speaker, this is one of the most difficult issues I've had to negotiate," Smith said before the afternoon vote. "We have made decisions that are difficult for us to swallow. But we believe this is the best package we could negotiate to ensure the long-term health of the fund and make sure benefits from the fund are secure."
The Vermont Senate had already voted unanimously in favor of the bill Tuesday. The General Assembly will now shuttle the bill to Gov. James Douglas for his signature.
Efforts by Progressives and one Independent to modify the bill on Wednesday failed. Rep. Paul Poirier, a Barre City Independent, authored an amendment that would have eliminated the one-week waiting period for unemployment checks called for in the legislation.
Poirier said the unemployment deficit which, barring the approval of reform legislation, was projected to hit nearly $200 million by the end of 2011, was caused by insufficient contributions from Vermont businesses.
For nearly three decades, the taxable wage base – the amount on which employers pay unemployment taxes – remained unchanged. Poirier said it's unreasonable to force cash-strapped residents to help foot the bill for the fund's restoration.
The one-week waiting period is expected to reduce outgoing benefits by more than $8 million annually.
"I just find it ironic that this caucus, probably the most liberal caucus, is going to say to workers, 'even though you weren't part of the problem … we're going to take your money away,'" Poirier told Democrats during their early-afternoon caucus.
Poirier said the one-week waiting period – historically part of unemployment law in Vermont – had been eliminated in 2000 when workers gave up the so-called "dependent add-on" that supplemented the benefit checks of people caring for children or vulnerable adults. Ten years later, Poirier said, workers are getting hit again.
Rep. David Zuckerman, a Burlington Progressive, presented a separate amendment that would alter the "earnings disregard" language in the compromise bill. Under current law, unemployment beneficiaries can pocket all supplemental income up to 30 percent of their weekly benefit. Income above that threshold is deducted dollar-for-dollar from the beneficiaries' unemployment checks.
The new legislation will instead allow unemployment beneficiaries to pocket only 30 percent of any income earned while on the unemployment rolls. Zuckerman said he understands the logic behind the statutory change – the earnings "cliff" in current law discourages any work after the 30-percent mark is hit.
But allowing workers to keep only 30 percent of their part-time earnings, he said, will drive people into under-the-table jobs. Why would someone take a $15-per-hour job if they could keep only $4.50 per hour, he asked, if they could get paid $8-per-hour in cash and keep the whole paycheck?
"We want people to work. We want people to work more hours and we want them to work above the table," Zuckerman said. "But the proposal is going to drive them under the table."
Zuckerman proposed changing the bill so that unemployment beneficiaries could earn up to 20 percent of their benefit without any deductions from their unemployment checks. Beyond that 20-percent threshold, he proposed, workers would keep 40 percent of their income.
But representatives, many of whom feared the changes might jeopardize Douglas' support for the unemployment bill, overwhelmingly defeated the both Poirier's and Zuckerman's amendments.
Smith said Democrats have plenty to dislike in the unemployment bill. But the administration proposals kept out of the package – notably, reducing the maximum weekly benefit from $425 to $409 – would be far worse for Vermont workers, he said.
He also noted that the one-week waiting period does not take effect until 2012, and sunsets in 2017.
"By coming to this agreement, I believe we secured benefits for people who, without the agreement, might not have gotten benefits," Smith said.
Distaste for the unemployment bill is a bipartisan affair in Montpelier. Even as Democrats bemoaned cuts to benefits, business interests in the state, and the Republican administration known for supporting them, cast their own aspersions at the package.
William Driscoll, head of Associated Industries of Vermont, said his organization's member businesses feel the bulk of the burden has been placed on employers – not jobless Vermonters. The taxable wage base will jump from the current $10,000 to $16,000 in 2012, increasing substantially the per-employee unemployment obligations on businesses.
Thereafter, the taxable wage base will be indexed to increases in the average annual wage – a self-correcting mechanism that supporters say will avoid the structural imbalances that spawned the current unemployment deficit.
Driscoll said the benefit reductions are too modest and short-term, given the enormous impacts employers will have to absorb. The sunset on the one-week waiting period, he said, prevents the kind of structural changes in outgoing benefits that will be needed to avoid another unemployment crisis.
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