Taxpayer advocate says bill does not address solvency, so taxpayers still pay
By Darwyyn Deyo and Eric Boehm | PA INDEPENDENT
HARRISBURG — Legislation to extend unemployment benefits to 45,000 Pennsylvanians who lost their extended federal benefits Friday is on hold in the state House, as lawmakers try to balance the cost of the bill with the state’s $3.5 billion debt in unemployment compensation from the federal government.
Though the federal deadline to extend unemployment benefits passed on June 11, the measure waiting in the state House would be retroactive to maintain benefits for the 45,000 unemployed Pennsylvanians. The legislation also aims to restrict eligibility for unemployment benefits based on several factors to save some benefit costs, but it does not address the state’s debt.
Several Republican lawmakers Monday said they were torn between the two sides of the issue.
“We have to get something done to extend the benefits. Everyone agrees on that,” said state Rep. Kate Harper, R-Montgomery. “But we also have to do something to pay back the $3.5 billion debt to the federal government.”
Harper was one of 30 Republicans — mostly from the southeast part of the state — to cross the aisle and vote to kill an earlier proposal, which would have addressed the unemployment debt with tougher restrictions on eligibility. That group is key to reaching an agreement on the issue.
Only California and Michigan have borrowed more from the federal government than Pennsylvania to cover unemployment compensation benefits during the recent recession.
But unemployment in Pennsylvania is down from a 15-year high of 8.8 percent in April 2010 to 7.5 in April 2011, according to the federal Department of Labor. As a result, the federal government told the state that the 13 weeks of federal extended benefits would expire this month.
While the state House bill would extend benefits to those losing their federal benefits, it also would require recipients to be actively seeking a new job. Another provision would prevent those who received more than $11,000 in severance pay from collecting state unemployment benefits.
Currently, there are no limits on collecting severance pay and no mandatory work-search requirement.
However, claimants are limited to 18 weeks of unemployment benefits, unless they had worked more than 18 consecutive weeks, in which case they are eligible for 26 weeks of benefits from the state.
The bill would increase the minimum amount of benefits per week from $35 to $70. However, to qualify for unemployment, the beneficiary would have to earn more than $116 per week, up from the current limit of $50.
The bill also would cut off unemployment benefits for those who leave work voluntarily, further limiting eligibility and reducing unemployment spending by the state.
House Labor and Industry Committee Chairman Ron Miller, R-York, said the bill would save about $140 million annually, which could be used to pay down the state’s unemployment debt. At that rate, the state’s debt to the federal government would be paid off in about 25 years.
But state Rep. Mike Sturla, D-Lancaster, said changing eligibility requirements for future unemployed workers in order to help those who are losing their benefits now was wrong.
“My guess is that every dollar in unemployment benefits that gets paid out goes back into the economy,” Sturla said.
Labor unions oppose many of the changes in the bill that reduce the eligibility for benefits.
Richard Bloomingdale, executive director of the Pennsylvania AFL-CIO, said this proposal restricts benefits to those in military families, who are forced to leave their jobs and move with their families, unless the spouse is dishonorably discharged.
Bloomingdale also said the limitations on benefit disbursement were better left to the courts.
“We’ve gone to this whole not trusting people” route, said Bloomingdale, “taking the decision out of the hands of referees who do this every day and have made pretty good decisions that have led to the case law. If it ain’t broke don’t fix it. They don’t save any money.”
Gene Barr, vice president of government and public affairs at the Pennsylvania Chamber of Business and Industry, said the bill is a good start but does not go as far as the previous legislation killed in May in the state House.
“We think they’re common sense reforms,” said Barr. “You always have to do something to get the requisite amount of votes to get this enacted … so we’re going to go with this.”
Even if the House passes the bill, unemployed Pennsylvanians will continue to wait for their benefits until the state Senate passes the same legislation.
State Rep. John Gordner, R-Columbia, chairman of the Senate Labor and Industry Committee, said the current form of the bill would not be passed by the upper chamber, because restricting unemployment from those who voluntarily quit was too harsh.
Sam Rohrer, state director for the Pennsylvania chapter of Americans for Prosperity, a taxpayer advocacy group, said while employers and employees pay into the unemployment compensation fund, taxpayers pay the cost in jobs and lower salaries.
“Without further changes being done to restore the solvency of the (unemployment compensation) fund, it amounts to kicking the can down the road, like’s been done with every other element of debt this state has faced,” said Rohrer.
The state of Pennsylvania paid out $374 million in fraudulent unemployment benefits during 2009, the most recent year for which data are available, according to the federal Department of Labor.
