Business & Economy

House panel decides to strike dependent benefit from unemployment bill

Emma Mulvaney-Stanak speaks in Burlington on Wednesday, December 4, 2019. Photo by Glenn Russell/VTDigger

A House panel has endorsed a slimmed-down version of a contentious unemployment bill that would strip bigger checks for laid-off Vermonters with children from an earlier proposal.

As passed by the Senate in March, S.10 proposed additional $50-a-week payments for people on unemployment who claim dependents. But the House Committee on Commerce and Economic Development reached consensus last week on removing the benefits from the bill, which would also soften an impending hike on businesses’ unemployment insurance taxes.

The commerce committee voted 8-2 Wednesday to endorse the amended legislation. It moves next to the floor of the Vermont House.

Rep. Michael Marcotte, R-Coventry, the commerce committee chair, believes that a conversation about greater benefits is better suited to the human services realm, rather than a bill dealing with the state’s unemployment insurance trust fund balance.

“We’ve gone through $300 million or better of benefits paid out of the trust fund in the last year,” Marcotte said in the commerce committee Wednesday. “It’s the responsibility of the employer world to fill that back up again. And to dig another hole before we even fill this one back up, I don’t believe that’s the right way to go.” 

The legislation originated as a proposal by Gov. Phil Scott’s Labor Department last fall that the employer tax hike be delayed. It has sparked debate among labor unions and businesses since the onset of this spring’s legislative session. 

Lobbyists for labor unions argued that a precedent set a decade ago — when employers and workers shared the burden of bringing Vermont’s unemployment insurance trust fund back to health after the Great Recession — should be honored now. 

Virtually every major Vermont business group has responded that the delay in tax increases does not offer employers true tax relief — merely a tax deferral. The tax proposal, therefore, does not call for a corresponding hike in benefits that employers will ultimately be on the hook for, they argue.

However, rather than delaying the hike in businesses’ UI tax schedules as the Senate bill proposed, the amended House bill would cut 2020 from the calculation used to determine those rate schedules. That would alleviate millions in business tax payments over the next 10 years because recession years disproportionately impact the calculus.

The Senate discussed that proposal, which businesses and the Vermont Department of Labor favor. But the upper chamber ultimately chose instead to order a survey examining the impacts of removing 2020, while delaying the rate schedule increase for a year.

The commerce committee co-hosted a hearing Tuesday evening for Vermonters who dealt with issues in the unemployment insurance system during the pandemic. The next morning, four Democrats on the committee — Rep. Charlie Kimbell, D-Woodstock; Rep. Stephanie Jerome, D-Brandon; Rep. Kirk White, D-Bethel; and Rep. Michael Nigro, D-Bennington — endorsed the amendment that proposes doing away with the dependent benefit. 

Rep. Emma Mulvaney-Stanak, P/D-Burlington, was one of the committee members to vote against the amended bill. The other was Rep. Warren Kitzmiller, D-Montpelier.

In an interview, Mulvaney-Stanak said the committee’s version of S.10 had become grossly imbalanced to favor businesses’ needs over those of workers struggling a year into the pandemic.

“Really at this point, the state is just defaulting to what has come through the federal government under ARPA,” said Mulvaney-Stanak, referring to legislators’ arguments that child care benefits in the American Rescue Plan Act will address the need for a dependent benefit.

That claim “completely ignores the economic inequality that existed prior to the start of the pandemic but has only widened since the pandemic began,” Mulvaney-Stanak said.

Costs of child care are so high that federal funds aren’t enough to support people trying to re-enter the workforce while taking care of children, Mulvaney-Stanak said, citing her own experience as a mother of small children. She said S.10 is one of the only bills concerning unemployment benefits the Legislature is considering this session. 

Austin Davis, a lobbyist for the Lake Champlain Chamber of Commerce, said the amended bill achieved a fair balance between workers’ and employers’ interests. It accomplished that by removing 2020 from businesses’ tax calculations and leaving that year in the calculus that determines the maximum weekly benefit amount for unemployment claimants, according to Davis.

“The artificial gain still does come at a cost to employers, but at least employers can now chart a course for the next 10 years knowing the end trust fund balance,” Davis said. “Artificial gain” refers to a boost provided by the 2020 recession on unemployment benefit and tax rates.

For labor interests, though, the removal of the dependent benefit spells a break from the post-2010-recession agreement. 

The new bill exhibits “little to no balance,” said David Mickenberg, a lobbyist for Working Vermont, a coalition of public and private-sector unions.

The legislation “violates many of the principles of equity and fairness that were established during the Grand Bargain,” Mickenberg said.

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James Finn

About James

James is a senior at Middlebury College majoring in history and Spanish. He is currently editor at large at the Middlebury Campus, having previously served as managing editor, news editor and in several other roles there. James was a reporter this summer at the Mississippi Center for Investigative Reporting and earlier was an intern at the Addison County Independent.

Email: [email protected]

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