Democratic leaders of the Vermont Legislature are accusing Gov. Phil Scott’s administration of sinking a $25 weekly unemployment benefit.
The benefit would have taken effect next month, but the U.S. Department of Labor ruled it illegal because it would draw from Vermont’s unemployment trust fund.
The feds relied on the Vermont Department of Labor’s interpretation of a new law that would have created the benefit, finding that it would be a supplemental benefit. Under federal law, supplemental benefits cannot be paid for from state unemployment trust funds.
Legislative leaders say that interpretation was wrong.
They also say the administration never alerted them that there could be a problem with the benefit in time for the Legislature to fix any issues the U.S. Department of Labor had with it.
The Vermont Department of Labor knew as early as June 14 that there could be a problem with the $25 benefit.
That was when Daniel Hays, an unemployment specialist with the U.S. Labor Department, emailed Cameron Wood, director of unemployment insurance and wages at the Vermont Department of Labor.
Hays informed Cameron that if Vermont interpreted the $25 “as a separate, supplementary benefit to individuals,” then the money could not come from the state’s unemployment trust fund.
The extra $25 a week was part of a compromise under which the Legislature would return $300 million over the next 10 years to employers by not raising their contributions to unemployment compensation as scheduled by a formula. Unemployed Vermonters, for their part, would get $100 million in additional compensation.
The bill providing the extra $25 a week could have been fixed in late June during the Legislature’s veto override session, said Sen. Michael Sirotkin, D-Chittenden, chair of the Senate Economic Development, Housing and General Affairs Committee.
Instead, Sirotkin and other legislative leaders said they were not made aware of a potential problem until Aug. 24.
That’s when Labor Commissioner Michael Harrington informed the Legislature that the U.S. Department of Labor had notified his department that the $25 benefit could not use unemployment trust fund money to pay for it.
On Aug. 28, Sirotkin and Senate President Pro Tempore Becca Balint, D-Windham, wrote back to Harrington, asking for more time to explain to the feds that the Legislature did not intend the money to be a supplemental benefit. For that reason, the Windham Democrat said, Vermont should not be disqualified from using the unemployment trust fund.
But by then, it was too late. On Sept. 1, Harrington received formal notification from the U.S. Labor Department that Vermont could not use the trust fund. In his own letter to legislative leaders, Harrington said even if his department had not interpreted the benefit as a supplemental benefit, and therefore made it ineligible for trust fund money, there was no way the Vermont Department of Labor’s unemployment insurance 51-year-old main-frame computer could be recalibrated to include the $25 in regular unemployment checks.
Sirotkin said Harrington or his staff should have involved the Legislature back in June.
“Though it would have clearly been common sense and courtesy for [the Vermont Department of Labor] to ask the legislature what they intended for this [$100 million] benefit, what is truly most telling here is that on June 23 and 24 the legislature was in session and could have clarified any confusion, if the confusion was brought to our attention,” Sirotkin wrote in an email to VTDigger. “Instead VDOL apparently decided to keep us in the dark and effectively killed a [$100 million] benefit that we had worked extremely hard to pass, and they had strongly opposed all along.”
The Unemployment Insurance Study Committee, a joint House and Senate group chaired by Rep. Emilie Kornheiser, D-Brattleboro, is holding a hearing Tuesday at which Sirotkin intends to question Harrington further.
“At the moment that it became clear that it would have been difficult to carry out our intent, a conversation could have been useful,” said Kornheiser, who took part in some of the hearings in May.
At least one Republican agrees.
“The Vermont Department of Labor should have let us know that this could not work,” said Rep. Michael Marcotte, R-Coventry, chair of the House Committee on Commerce and Economic Development. “Everybody was caught off guard at the end of August.”
“Hindsight is always 20/20,” Harrington told VTDigger Tuesday.
He defends his own actions and those of his department.
He said the initial response his department received from the U.S. Department of Labor on June 14 was unclear.
“It would have been premature on our end to bring anything back to the Legislature,” Harrington said.
He said his department could have gone back to the Legislature and started conversations but that it would have prompted more questions, so his department proceeded with its interpretation of the law.
“It’s easy to point the finger at the other side saying they should have done something different,” Harrington said. “It’s the Legislature’s job to enact laws. It’s the administration’s job to interpret those laws.”
Harrington said his staff spent the next month and a half having conversations based on how the law is written and on research into the legislative session.
“I know there is a belief out there that we intentionally waited until after the veto session,” Harrington said. “That session wasn’t even part of my conscious thought at all. There was never a conscious decision on my part to say we should wait.”
Harrington said he was surprised that the U.S. Labor Department decided states could not use the unemployment trust fund to supplement unemployment benefits.
That decision leaves unemployed Vermonters without the $25 weekly benefit the Legislature voted for and Scott signed into law.
Correction: An earlier version of this story misstated the body holding a hearing on unemployment funding on Tuesday. It is the Unemployment Insurance Study Committee.
