Biggest UI Hole: It’s California By a Wide Margin

Indiana is unfortunately all too familiar with outstanding loans from the Federal Unemployment Account (that means borrowing money from the feds to provide unemployment benefits for state workers who have lost their jobs). At least Indiana’s balance of slightly over $2 billion owed pales to, guess who, California.

According to U.S. Department of Labor numbers at the end of February, California owed $10.2 billion of the $38.55 billion total that 28 states had borrowed from Uncle Sam. New York is second on the list with a $3.7 billion balance, followed by Pennsylvania, North Carolina, Illinois and Ohio.

California’s UI Trust Fund did not become insolvent until 2009, so the debt has been piling up quickly. Businesses suffer, however, as outstanding loan balances mean they lose credits and pay higher federal unemployment taxes until the situation is resolved.

Indiana Chamber efforts in 2011 helped move Hoosier businesses into a lower rate schedule to offset some of the increased federal payments. The move is expected to save employers a combined $2 billion through 2020.

Who else has outstanding federal balances? Florida, New Jersey and Wisconsin owe between $1 million and $2 million. Those with less than a $1 million balance (biggest balance first) are Kentucky, Nevada, South Carolina, Missouri, Georgia, Connecticut, Arizona, Colorado, Arkansas, Virginia, Rhode Island, Minnesota, Michigan, Kansas, Vermont, Alabama, Delaware and the Virgin Islands.

Legislature’s Unemployment Fund ‘Fix’ to Put Even More Hoosiers Out of Work

The following is a statement from Indiana Chamber President Kevin Brinegar on House Enrolled Act 1379 — the unemployment insurance trust fund legislation just passed by the Indiana General Assembly. Brinegar explains:

“We’re happy to see that Indiana company owners and management representatives are appropriately contacting the Statehouse and urging Gov. Daniels not to sign on to one of the largest tax increases on business in the state’s history. One of our members, owner of a South Bend company (with six employees) celebrating its 50th anniversary this year, said he will personally come to Indianapolis and deliver the keys to his business to all those involved if this legislation becomes law.

“A ‘solution’ that raises business taxes more than $700 million over the next two years at a time when many companies and their employees are already struggling is no solution at all. Legislators are already coming back to work to pass a new state budget (in a special session). They should also be required to enact an unemployment insurance trust fund plan that balances revenue increases with expense reductions and does not threaten additional job losses as a result of these totally unreasonable tax increases.”

You can take action and let Gov. Daniels know how this will impact your company by sending a letter though the Indiana Prosperity Project grassroots web site, calling the governor’s office at (317) 232-4567 or visiting the Statehouse at 200 W. Washington Street in downtown Indianapolis.

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.

Unemployment Trust Fund Proposal Not Good for Business

George Raymond, the Indiana Chamber’s VP of Human Resources & Labor Relations, lays it out pretty succinctly in this Fort Wayne Journal-Gazette article:

A House Democrat unveiled a proposal for fixing Indiana’s unemployment insurance system Monday that would triple taxes on employers to fund unemployment claims.

“The type of tax increase this bill calls for is going to cause additional terminations of employment,” said George Raymond, lobbyist for the Indiana Chamber of Commerce. “That’s a tremendous burden.”

Indiana’s unemployment trust fund has had a structural imbalance since 2001 and ran out of money last year – forcing the state to borrow at least $725 million from the federal government to pay unemployment.

The Democratic-controlled House failed to pass a bill addressing the issue during the first half of the session. Then, the Republican-led Senate passed a plan that raised about $870 million in new annual revenue for the fund through both direct tax increases as well as benefit and eligibility changes.

The Senate version would permanently increase business taxes $328 million annually starting in 2010.

House Bill 1379 is now in conference committee, where conferees from all four legislative caucuses are trying to negotiate a compromise.

Rep. David Niezgodski, D-South Bend, presented a proposed conference committee report Monday that included more than $1 billion in new taxes on employers.

Frugal Hoosiers has more on the matter.