Politics complicate push to fix Indiana jobless fund-WEB ONLY

Political sparring in the narrowly divided Indiana House has sidelined legislation to help fix the state’s bankrupt unemployment insurance fund – but lawmakers say the critical issue will be revived.

The proposal would have significantly raised taxes on employers to help balance the fund. The account pays out millions of dollars more than it collects and is relying on federal loans to issue unemployment checks.

Bill sponsor Rep. David Niezgodski (D-South Bend) said he would not call for a vote on his proposal yesterday – a key legislative deadline in the Democratic-led House – because Republicans weren’t willing to join his party in supporting the tax increase. Republicans said Democrats should pass the bill themselves if they think the legislation is the right way to go. They fear GOP votes for tax increases could used against them in future elections.

Both Republicans and Democrats said the issue must be revived in the GOP-dominated Senate. Senate President Pro Tem David Long (R-Fort Wayne) said both sides need to work on a plan before the legislative session’s April 29 adjournment deadline.

“These are going to be very difficult decisions for all of us to make and we could go into overtime on this issue,” Long said. “I’m serious. If people aren’t willing to roll up their sleeves and work to find a solution, we could be here until the end of May working on this particular issue.”

The House bill would have raised taxes on employers to help balance the fund, but wouldn’t lower payments to unemployed workers or tighten eligibility rules.

House Minority Leader Brian Bosma (R-Indianapolis) said a real solution would include more than just tax increases. He said Democrats who control the House 52-48 should pass the bill on their own if they truly think it’s a good start.

“It’s the majority’s responsibility to move forward on critical issues,” Bosma said. “We did it when we were in the majority. We didn’t stand and wait for Democrats to agree.”

Niezgodski said both Republicans and Democrats need to support a solution.

“This is a bipartisan problem that must be addressed without thinking about political impact,” he said. “Our responsibilities are greater than simply seeking to make cheap political points.”

Niezgodski’s bill would have raised more money from businesses by increasing both the taxable wage base and tax rates. The changes would have raised an additional $260 million a year for the account. That’s not enough to make it balance as last year it took in $579 million but paid out $986 million in benefits.

But lawmakers are also waiting to see whether federal stimulus money could help the fund. The Daniels administration is still looking at strings attached to stimulus money to see whether the state should accept it, Jankowski said.

The state’s unemployment insurance fund wasn’t always in trouble. In 2000, the state’s unemployment fund had a surplus of $1.6 billion. But lawmakers raised benefit payments for the unemployed and lowered employer premiums, draining the account.