03/05/2009 - New tax eyed to aid jobless insurance (Louisville Courier-Journal)

New tax eyed to aid jobless insurance
Labor says workers shouldn't bear brunt

By Lesley Stedman Weidenbener
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INDIANAPOLIS -- Workers shouldn't have to pay a new tax to help fix Indiana's broken unemployment insurance system and can't afford significant cuts or benefit changes, representatives of labor groups told state senators yesterday.

Both are options lawmakers are discussing as they consider ways to restructure the insurance program that provides help to laid-off workers.

The Indiana Unemployment Trust Fund is taking in far less in tax revenue from employers than it pays out in benefits, an imbalance that could reach more than $1 billion this year. Already, the state is borrowing from the federal government to pay claims.

Lawmakers are considering increases in employer taxes, cuts in benefits and changes in who qualifies for the program to try to close the funding gap. The bill's author, Sen. Dennis Kruse, R-Auburn, said this week that another option is a tax on workers.

But yesterday, Nancy Guyott, lobbyist for the Indiana AFL-CIO, said labor groups oppose that idea.

"That is a fundamental change" in the structure of unemployment insurance, Guyott said. "We don't favor that, and I think it's a fundamental departure that would have a lot of unintended consequences."

At a joint meeting of the Senate Pensions and Labor Committee and the Tax and Fiscal Policy Committee, senators took two days of testimony on the unemployment insurance issue. Kruse plans to introduce a legislative plan as soon as next week that he said will have benefit cuts and eligibility changes, including restrictions on so-called seasonal workers who are laid off year after year.

The proposal won't include a tax on workers, Kruse said, although the idea will remain part of the discussion.

Only three states -- Pennsylvania, New Jersey and Alaska -- use a tax on workers as part of the mix of funding unemployment insurance benefits, and they're typically imposed only when the fund's balance is low.

Indiana has traditionally funded benefits using only the tax on employers. But in 2000, the General Assembly lowered those tax rates and expanded benefits, creating an imbalance that ate into a surplus until the fund ran out of money. Now, lawmakers are facing an emergency in the system.

Pete Rimsans, associate director of the Indiana State Building & Construction Trades Council, said the state shouldn't begin punishing workers with cuts in benefits or by eliminating payments for workers who are chronically laid off.

Teresa Voors, commissioner of the Indiana Department of Workforce Development, said construction companies and manufacturers are most likely to routinely lay off workers, and that means they pay far less into the system than those workers receive in benefits.

Kruse said he is considering ways to tighten benefits for some of those workers.

Rimsans said a crisis with the overall unemployment insurance system "is no reason to attack any single industry."