State lawmakers are poised to force all Arizona employers to pay more in unemployment insurance, at least temporarily.
Legislation awaiting action would add a surcharge of up to $28 a year, on top of what they already have to pay for coverage. That would double, to $56, in 2012.
But Marc Osborne, a lobbyist for the Arizona Chamber of Commerce and Industry, said he doesn’t expect members of his organization to squawk. He said most of them understand that the alternative would be worse — a lot worse.
The problem, quite simply, is the fund that finances state jobless benefits is broke. In fact, it’s worse than that.
Fueled by a tax on the first $7,000 of each worker’s salary, the fund at one time had more than $1 billion.
The fund always has been cyclical. When times are bad, the balance goes down. When times are good, the assessments replenish it for the next economic downturn.
But the recession has been both longer and deeper than anticipated.
When the cash ran out last year, the state started borrowing money from the federal government. Right now the debt is $246.9 million.
Last year the money came without interest, a provision of the federal stimulus program. But that has expired and the state now is accumulating interest at a variable rate which is running at 4 percent.
The real big problem, though, is what happens in 2013 if the state is still in debt.
“The feds come in and become the payday loan industry of unemployment,’’ Osborne explained.
“They’ll take the money,’’ he continued. “But they’ll take it quick and fast. And you’ll have a huge spike in 2013 if our fund balance doesn’t get healthy.’’
Osborne said the surcharges are a better alternative, at least in part because they provide predictability.
“We can go to our employer community and say, ‘It’s going to hurt, but you should not expect another surprise increase,’ ‘’ he said. “That’s one of the messages that we got from our members: A little bit of tax certainty would be really nice.’’
The current law bases each company’s premiums on how often its workers are laid off and collect benefits.
For the best employers, the rate is 0.02 percent of the first $7,000 of salary. That computes out to just $1.40 a year.
At the other extreme the rate can go as high as 5.86 percent, or more than $410 a year.
The Department of Economic Security, which administers the fund, reports the average premium at $156.80.
The agency actually tried to get lawmakers to impose a $42-a-year surcharge beginning last year. That failed after some businesses balked.
Rep. Bob Robson, R-Chandler, the prime sponsor of this year’s version, said this should prove more acceptable. Part of it, he said, is the fiscal reality is sinking in.
“They know it’s a bill that has to be paid,’’ he said. And Robson said that phasing in the surcharge has helped gather support.
Robson said if everything goes according to plan, the two years of surcharges should raise enough to pay off the loan and any accumulated interest by 2013. But he acknowledged a lot of that is based on what condition the economy is in next year.
To that end, HB 2025 has an escape clause of sorts: It allows DES to increase the surcharge by another 0.2 percent in 2012 — $14 a year — if it looks like the loan won’t be paid off by the end of that year.
“The name of the game is solvency,’’ Robson said. “Get it over with and the system is solvent once again in case another shock wave comes through.’’
goldenkee posted at 6:49 pm on Fri, Jan 14, 2011.
The past two and a half years Arizona has averaged 300,000 unemployed workers. The maximum benefits amountin Arizona is $240.00. In many other states that amountis $390.00 week. Subtracting the 26 weeks of state benefit would leave 104 weeks of fereral extentions in that two and a half years. ecause the Arizona legislature has consistantly "low balled" benefits to arizona's unemployed this has caused the state almost a loss of "4.7 billion" dollars in economic impact over the two and a
half year period that would have been provided for by the federal government.
(130 - 26 X 300000 X 150)
The last I knew the federal tax rate is consistant across all states and the citizens of Arizona are just as responsible to pay back this money as the states that pay a higher benefits amount. This inpacts the citizens of Arizona who are subsidizing
those states higher ememployment benifts. This will reduce or extend lack of current growth and stagnate the future growth in Arizona with higher taxes without equal benefit.
This article is all about the "tail wagging the dog." Maybe something the "Brain Trust" at the state capitol may want to consider.
rrjenn posted at 7:46 pm on Fri, Jan 14, 2011.
Well, we have to do something to offset the cost of benefits to the several hundred thousand illegal aliens that continue to plague this state. Maybe if the unemployed would help work to get all of sb1070 passed and pulling the anchor away from the illegal babies that would be a great help to the states economy.
wdgnas posted at 7:53 am on Sat, Jan 15, 2011.
maybe if the state would go after the businesses that hired illegal immigrants there would be more jobs and fewer unemployed. that won't happen. its bad for business and whats bad for business is bad for america...
091468mr posted at 12:07 pm on Mon, Jan 17, 2011.
$28.00 per company hardly seems worth the effort. I don't know the number of businesses we're talking about. 50,000 businesses would equate to $1,400,000. Maybe that would work. I hope so. I tend to question rrjenn, above. I would think most employers who illegally pay the illegals, do so under the table and they're not included on any payroll system. I think the employers are more to blame for the state's problems than the illegals themselves.
jlmealer posted at 7:56 pm on Thu, Mar 31, 2011.
I CAN FIX THIS!
It's all about jobs and we certainly have very few to go around right now.
The jobs plan is in the Governor's office and she needs YOU to call or send an EMAIL or a FAX demanding, (questioning or simply asking about) that you want her to proceed. This little to no cost fix and we can turn this economy around!
As I typed, I have submitted "THE PLAN" (brief) with the Governor, we can fix this entire economic downfall quickly and easily without costing us anything but the simple "appointment" as requested for Hon. Gov. Brewer to make. I have the contacts and the funds pending for new Arizona MFG jobs (not from my own company, but for new businesses!)... Readers, please humor me and help out. CALL ME if you need encouragement.
We need jobs before we can do ANYTHING.
Arizona (and America) needs your help, people:
You can find a vague outline of the plan online but the good stuff is sitting in front of our great Governor (waiting for your phone calls and email!)...
Please contact Arizona's Governor Jan Brewer and
simply ask about the "Mealer Economic [ie. jobs] Plan" ... and making it happen.
... that's all you need to do and we can turn this ship around.
Call 602 542-1381 or toll free in rural Arizona 800-253-0883
FAXES to: 602 542-1381
Or email her office from
http://azgovernor.gov/contact.asp