Advocates and labor leaders held a press conference on Thursday to protest proposals from the Vermont Senate and the Douglas administration that would restrict benefits for laid-off workers.
In January, the Unemployment Insurance Trust Fund went bankrupt and the state has been borrowing $4.1 million a week from the federal government to pay out benefits to unemployed workers. The state anticipates borrowing as much as $400 million through 2014.
The restrictions would include a mandatory one-week waiting period; a 10-15 percent reduction in allowable part-time wages; and a change in benefit calculations.
Sen. Vince Illuzzi’s proposal, S.290, to balance the fund within four years includes increases in taxes for businesses, a two cent payroll tax on all employees and a suite of new restrictions on unemployed workers seeking benefits. The business taxes would raise $200 million, and taxes on workers would raise an additional $200 million by 2014. The Douglas administration proposal is similar, though it does not include a payroll tax.
Christopher Curtis, an attorney with Vermont Legal Aide, said the new limits on compensation for laid-off workers are really cuts.
The restrictions would include a mandatory one-week waiting period; a 10 percent to 15 percent reduction in allowable part-time wages for workers on unemployment; and a change in the way benefit amounts are calculated – compensation would be based on four quarters worth of earnings instead of a worker’s two best quarters. Curtis said basing compensation on four quarters would lower benefits for most workers because it could include unpaid leave time; Patricia Moulton Powden, commissioner of the Department of Labor says this change would push seasonal workers to find work rather than rely on unemployment compensation.
Though about 40 states are expected to see their unemployment funds go broke this year, only three, according to Curtis, have enacted benefit cuts or eligibility restrictions. None have made as many sweeping changes to compensation as are currently proposed in Vermont, according to a survey from the National Association of State Workforce Agencies.
Vermont’s unemployment system has not been significantly reformed since 1983, and the taxable wage base, the portion of an employee’s earnings a business pays unemployment tax on, was increased for the first time last year, from $8,000 to $10,000. Under new proposals, employers would pay a percentage tax on a wage base as high as $18,000 in 2014. The unemployment tax is less than 1 percent.
Curtis passed out copies of the draft Report of the Unemployment Trust Fund Reform Study Committee – which had not yet been released to the public. Members of the committee, including senators Ann Cummings, William Carris, Vincent Illuzzi, Mark MacDonald, Kevin Mullin and Douglas Racine and representatives Michael Obuchowski, Warren Kitzmiller, Michael Marcotte, John Moran, David Sharpe and Megan Smith, did not come to an agreement on the final language of the report, which still contains highlighted changes.
The committee’s preliminary recommendations for bringing the fund back into solvency are based on raising the taxable wage base rather than cuts to benefits.
Draft of the report of the Unemployment Trust Fund Reform study committee
