By Jessica Wray
Despite a proposal from President Barack Obama that would allow states extra time to replenish their unemployment insurance funds, Indiana Republicans say the state should push ahead with its own solution.
A GOP-backed measure that cuts unemployment benefits in an effort to pay back a $2 billion dollar federal loan (House Bill 1450) has passed the Indiana House of Representatives, and it cleared a Senate committee Thursday.
Gov. Mitch Daniels told reporters Thursday afternoon that he is skeptical of Obama's proposed plan.
"I'm very pleased with what the General Assembly is doing," Daniels said, according to The Evansville Courier & Press. "They've got a very good compromise program, and it's real. I know it's real. And it will address our problems. So we ought to just move straight ahead with it."
Through the bill, businesses would pay about three-quarters of the money they would have paid under a different fix passed two years ago. Cuts in unemployment benefits would make up the other quarter.
Proponents say they think that will replenish the state's fund and pay down the federal loan by 2020.
Sen. Karen Tallian (D-Portage) thought that the time period should be stretched out further to eliminate increased financial pressures on employers. She also criticized the benefits cuts. The bill would reduce average weekly benefits from about $283 to $220.
"We have said that we need to be able to pay off the indebtedness, and including covering the interest by 2020," said Mark Everson, Indiana Department of Administration commissioner. "We can't just string this forever. That's a long period of time as it is."
Rep. Dan Leonard (R-Huntington) said in a hearing that the bill he authored would decrease the weekly average, but increase benefits for some. He said it would be determined on an individual basis, based on a person's yearly income — a change from previous plans that looked at quarterly pay periods. Leonard said that the new plan would make the benefits more equal.
But Democratic committee members argued that lowering the weekly average could cause an increase in the number of people eligible for federally funded benefits, like food stamps.
The committee passed the bill with an 8-4 vote.
The Obama administration will propose its budget recommendation on Monday, part of which is a plan that would cancel a series of business tax increases set for the next two years. The tax increases would cost employers $21 per worker annually, costing Indiana businesses about $80 million a year.
Another part of the plan would allow states to tax more. It would more than double the taxable wage base — employers would go from paying taxes on the first $7,000 of individual employee salaries to $15,000 — but it would also cut the unemployment tax rate in half. The federal government would not stand to gain from the change.
Indiana lawmakers are not alone. Legislators in other states, like Florida, are pushing for their own solutions to the unemployment benefits problem.The above is one of an ongoing series of reports from the Indiana Statehouse by students at the Franklin College Pulliam School of Journalism.