State lawmakers to take on unemployment insurance

January 24, 2011

Businesses with a history of laying off employees would pay more in unemployment insurance costs, and workers in industries where layoffs occur regularly would receive lower benefits under a bill Indiana lawmakers are preparing to take up.

Rep. Dan Leonard, R-Huntington, the author of House Bill 1450, said the measure aimed at fixing the state's insolvent unemployment system is fair because it costs more for companies that lay off employees the most often and includes a formula to ensure that people who earn the same salary receive the same unemployment benefits.

"This makes things a little fairer," he said.

Leonard said the bill would not change unemployment benefits the typical out-of-work person receives.

The bill tries to address three problems with the state's unemployment insurance system: a $2 billion debt to the federal government, interest on that debt and fixing the system so it is fiscally sound in the future. The first committee hearing on the bill is scheduled for Tuesday.

The Legislature has been working on fixing the unemployment insurance system since voting in 2009 to raise employers' premiums. That was supposed to happen last year, but lawmakers put off the increase for a year because of the recession. Those changes go into effect this year.

That fix, however, didn't specify who would pay back the $60 million to $70 million a year interest on the debt. Lawmakers say by law that federal regulations don't allow the interest to be paid off directly through the unemployment insurance fund.

The bill being considered by the House would lengthen the amount of time it would take to repay the debt, reducing the cost to employers, but add a surcharge to those companies to pay off the interest. Lawmakers say most businesses will pay about the same each year as they would have under the bill passed in 2009. Some businesses that have a history of laying off employees will see a bigger increase.

Under the plan, Indiana's unemployment system should be solvent by 2020.

Kevin Brinegar, president of the Indiana Chamber of Commerce, said although he hopes to see some minor changes in the bill, he called the legislation was good overall considering the situation, calling it a "lose-lose for everybody because of the deficit we have."

"We think this will add stability to the system and get us through this difficult period," he said.

Leonard said the bill would soften the blow on employers compared to the bill passed in 2009, saying he hopes it might lead to more people being hired.

The bill also would make changes in how much in weekly unemployment insurance some people would receive. Currently, two people paid $30,000 a year can receive starkly different unemployment benefits — as much as $190 a week — depending on how many weeks they worked. The bill would give the same benefit to people who earn the same amount annually.

Indiana State AFL-CIO president Nancy Guyott called the measure disappointing, saying she believes the bill would affect most hourly workers who become unemployed.

"Most hourly workers have fluctuations in the number of hours that they work over time and anybody in that situation would have reduced benefits," she said.

Leonard said the bill also would eliminate unemployment benefits for people who work at plants where there are regularly scheduled shutdowns for reasons such as retooling.

Senate Tax Chairman Brandt Hershman, R-Monticello, said the bill strikes a responsible balance between impact on employers and employees.

"It's a very difficult challenge to address, particularly in this economy," he said. "It's a difficult problem to solve."


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