UI Bill a Real ‘Stinker’

There has already been a lot of rhetoric — with more to come — over the $700 million business tax increase disguised as a solution to the state’s unemployment insurance trust fund bankruptcy.

If Senate Republicans were as resolute in negotiating a balanced piece of legislation that would truly fix the problem as they were in crafting a fantasyland press statement that contains more inaccuracies than insights, we wouldn’t have this problem today.

Don’t believe us? Try this Fort Wayne News-Sentinel editorial, using the words "stinker" and "abomination" in describing the legislation. It also won’t be the final evaluation of this mess, which ironically and sadly will lead to even more job losses.

Read the News-Sentinel take here.

But the geniuses in the legislature decided to put the whole problem on the shoulders of employers.

Businesses currently pay between 1.1 percent and 5.6 percent on the first $7,000 of each employee’s annual pay, with higher percentages charged to companies with a greater history of layoffs. Under the new law, businesses next year will pay between 0.70 percent and 9.5 percent of the first $9,500 of a worker’s pay. Starting in 2011, tax rates will rise to 0.75 percent to 10.2 percent of $9,500.

The fund took in $579 million last year and paid out $986 million and is expected to pay out $900 million more than it collects this year. The state has already borrowed nearly $800 million from the federal government to keep the system going.

The legislation is expected to raise about $315 million a year, and it includes administrative changes lawmakers hope will save the state about $300 million more. Not exactly a total solution, is it? And what will the cost of the fix be?

“Absolutely there will be job losses” because of the extra burden on businesses, says Patrick Kiley, president of the Indiana Manufacturers Association. The Indiana Chamber of Commerce agrees.

Unemployment is usually a “lagging indicator” of a recession, meaning it will continue to rise after the economy stabilizes. This bill is likely to add even more. That means even more paid out and still not enough coming in.

We take it back. Gov. Daniels should have vetoed this abomination.

Chamber to Ask Governor to Veto Unemployment Trust Fund Bill (Now Updated to Help YOU Take Action!)

Indiana Chamber President Kevin Brinegar tells Inside Indiana Business that the Unemployment Trust Fund Bill passed last night "falls on the backs of employers" and that we’ll ask Gov. Daniels to veto the bill. Here’s the audio.

IIB reports:

The Indiana House and Senate passed a $730 million fix for the unemployment trust fund.

The measure includes eligibility rules and higher payroll taxes on employers.

The proposal passed the Senate with just three no votes, but it took a party-line vote to get through the house.

The top tax bracket for employers would nearly double to 10.2 percent, focusing on the companies who lay off the most employees. The bottom tax rate would be reduced.

The eligibility changes include requiring recipients to demonstrate they have applied for new work and denying benefits for employees fired for misconduct.

The Indiana Chamber and Indiana Manufacturers Association maintain the bill will end up resulting in job cuts because of the higher taxes.

UPDATE: Take action now! You can e-mail a letter to the Governor’s office or find the phone number to call through the Indiana Prosperity Project. Simply visit this site to send the letter.

Strong Allies Working Together to WIN!

Over the last two weeks, I had the pleasure of joining with the Indiana Manufacturer Association’s (IMA) Ed Roberts to announce the Indiana Chamber and IMA’s endorsement of candidates running for state representative. The three candidates our organizations endorsed were Bob Heaton (HD46 – Terre Haute), Mark Messmer (HD63 – Jasper) and Randy Truitt (HD26 – West Lafayette).

Over the years, we have fought many battles together and almost always support the same candidates. Our two organizations are strong, strong allies and we work together on many projects, but appearing together to announce candidate endorsements was a first. And, our timing could not have been better. These three candidates are all in tough, competitive races and need the help of the business community to win. These three candidates are all small business owners who understand the difficulties of making a payroll, growing a company, providing training and education for workers, and the importance of economic development to their community.

By working together with the IMA (and several other like-minded business allies), we can and will win tough campaigns and move the economy of Indiana forward. With the example of the complete lack of cooperation occurring in Washington, D.C. as a backdrop, it is good to know that the Indiana business community is working together closely and focused on what is important this election year – WINNING with small business owners like Bob Heaton, Mark Messmer and Randy Truitt.

Election Prosperity for All

Raymond J. Keating is a highly respected economist with the Small Business & Entrepreneurship Council. His article, “Entrepreneurs and Election Year Activism,” makes some very good points with one important omission.

His submissions are right on target.
Politics and public policy matter a great deal to businesses and their future success. The business community absolutely must be involved in the political process and be actively engaged with their elected officials, particularly those elected officials close to home like your state senators and representatives. Does anyone think for one second that labor and teacher unions are not involved? If a business owner and his or her employees are not engaged in the process, then the decisions affecting them will be left to those who are involved.
Quite possibly the best option for engaging your employees was not mentioned – educating and providing your workforce with information on business issues that affect your company, candidates running for office and the electoral process in a non-partisan manner. This works AND employees want this information. Tell them why an issue is important to the company they work for, and their job, and they will usually put the pieces together.
We know that the number one trusted source of political information for employees is their employer. Using a resource like the Indiana Prosperity Project  (a joint program of the Indiana Chamber and Indiana Manufacturers Association) accomplishes this. Provide employees with non-partisan information on issues and candidates – and everyone wins.