Plan to repair jobless system advances in Senate-WEB ONLY

A plan designed to fix Indiana’s bankrupt unemployment insurance fund drew misgivings from business and labor groups yesterday as it advanced to the Republican-controlled Senate, which is expected to pass some version of the proposal.

The Senate Tax and Fiscal Policy Committee endorsed the plan on a 9-3 vote after four hours of public testimony, a key step toward fixing a system that has been paying out millions of dollars more in benefits than it has been taking in through employer taxes.

The fund has borrowed about $535 million from the federal government to remain solvent. That figure could climb as high as $1.2 billion by the end of the year unless lawmakers fix the system.

The Senate Republicans’ plan would reduce benefits for most jobless people and tighten eligibility requirements. It also would increase the amount most businesses pay into the system, with new payment schedules to take effect in 2010.

Some businesses opposed a provision to impose a one-time, 10-percent increase in their premiums this year to help balance the fund. Others suggested that employees pay into the system.

“If we continue to bleed to death the horse pulling the wagon, who will pull the wagon?” said Don Ehlerding, owner of Fort Wayne-based Ehlerding MotorSports. “Maybe it’s time for the riders to get off and carry their own weight.”

Under the plan, weekly benefits would be paid on a sliding scale that would decline the longer a jobless person is in the system.

The maximum benefit of $390 would be increased to $424 for the first four weeks but eventually drop to $310 in weeks eight through 26. Only those eligible for the maximum $390 benefit would see a temporary increase.

Some Democrats have criticized that, saying it is unfair to lower-paid workers who lose their jobs.

Nancy Guyott, executive director of the Indiana AFL-CIO, said many people are desperate for work, and benefits are crucial not only to them but the economy.

“So here in the depths of an economic downturn, I think public policy experience would encourage [us to] put money in the hands of unemployed workers to stimulate the economy, this bill – it seems instead – we are taking money out of their hands, out of their pockets,” Guyott said.

Another provision would allow companies that lay off employees for several weeks at a time every year to opt out of the unemployment system or reimburse the state for nearly all the costs of benefits for their employees.

Pete Rimsans, associate director of the Indiana State Building and Construction Trades Council, said that provision unfairly targets the construction industry, in which workers often lose their jobs temporarily when a project ends.

“Our contractors have paid in and our members are willing and able to work,” he said. “If no work exists, it’s not their fault. Sometimes the economy just stops.”

Senate Tax Chairman Brandt Hershman (R-Wheatfield) said the construction industry accounts for nearly 24 percent of employers who pay less into the system than their out-of-work employees draw in benefits. That’s highest among such employers.

Senate Republicans are taking the lead on the issue after partisan squabbles prevented a bill from passing the Democrat-led House. Yesterday’s vote would have been a straight 8-4 party line vote, but Sen. Timothy Skinner (D-Terre Haute) made a procedural mistake in voting with Republicans for the bill.

The Legislature is scheduled to adjourn April 29.