State House Approves Unemployment Extension

A bill to authorize twenty extra weeks of unemployment insurance payments for Tennessee’s jobless passed in the state House of Representatives Monday night.

Most of the money comes from the federal stimulus package, but the state must raise the amounts paid by employers to be in compliance with federal guidelines.

Memphis Representative Brian Kelsey argues that the state is being led astray by the federal government.

“We should not be increasing benefits at this time in the state’s fiscal situation, in which we’re having a hard time balancing our budget. And the amount of money we’re getting from the federal government to do this, is really just a pittance, and it’s only going to last us, I mean, at the rate that we’re blowing through this money right now, it would only last us a couple of months anyway.”

But members of both parties who had worked to pass the bill said it was a “win-win” situation. Tennessee’s unemployment fund was on pace to be insolvent in a matter of years and potentially be taken over by the federal government.

The bill’s sponsors say the amount of increase paid by employers is less than it would be if the federal government took over the system – which is largely funded by federal money.

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The bill passed 76 to 19.

The bill is HB 2324 Curtiss/SB 2315 Kyle.

The bill is on the Senate agenda Tuesday.

As passed, the bill basically reads as in this amendment No. 1 in the House.

Amendment 2 changes a reference to the tables of payments that apply to employers.

The bill would add some benefits for some workers who work as few as 20 hours a week.
Knoxville Representative Stacey Campfield took exception to that change.

“What amendment number three would do, and I think it would save us money and not have to increase taxes on our employers as much, all it simply says is if you’re a part-time or seasonal employee, like people working at Dollywood, or places along those lines, a lot of seasonal workers, they work half a year and then they take the rest of the year off. What My amendment would do, is say, if you’re a part-time or seasonal employee, you’re not eligible for unemployment benefits.”

But even fellow Republicans voted against Campfield’s amendment, which died 13-79.

A few numbers

Under the new law, the rate paid by employers goes up – although it will come back to a lower level with the trust fund reaches the $900 million level.

Currently employers pay the tax on the first $7,000 of each employee’s salary. Under the bill that taxable base goes up to $9,000.

When the amount in the trust fund reaches $900 million, the taxable base is supposed to shrink back to $8,000 a year.

Every employer doesn’t pay the same rate. Industries which rarely lay off employees pay lesser amounts from the rate tables; seasonal industries like construction pay higher rates.

Previously the fund was considered “full up” when it hit $600,000,000. Bill sponsors say that as of now, the fund is down to about $100,000,000. The influx of federal stimulus money staves off “going broke” until the fund can be rebuilt with employer contributions on those employees still working.

Currently, after two federal extensions of benefits, jobless workers can receive benefits for up to 59 weeks. The state bill will add about 20 weeks.

The largest benefit a jobless worker can get is $275 a week.

Sparta Representative Charlie Curtiss says the extended benefits – the extension of time that benefits can be paid – will end after the jobless situation improves.

The simplest bill summary by state legislative staff is here.

(The reference to “premium rates” in the summary and in the bill refers to the amount that reporters and politician call the “unemployment tax.” The law is written to make the program an unemployment insurance package rather than a tax fund.)