Jobless aid set to grow in Tennessee

Compromise would shield fund, extend benefits By Chas Sisk • THE TENNESSEAN • May 20, 2009 Legislation that would extend benefits for jobless workers and rebuild the state's unemployment fund is advancing in the Statehouse after Republicans and Democrats reached a compromise. House and Senate panels are scheduled to vote today on a package of changes to the unemployment laws that would affect workers and employers. The changes, which were brought on by the recession and the federal stimulus plan, temporarily would increase taxes on employers by about $110 a year per worker but also would give unemployed workers as much as 20 more weeks of benefits. The 20-week extension would help people like Jim Giordano, a technology marketer who has been looking for a job for several months. Giordano says unemployment benefits have been just enough to cover health insurance for his family while he searches for a new position. "This buys me some time to get a job that's right," the Nashville resident said. The legislation, HB 2324, is not expected to be controversial. The benefit expansion would be funded using the $141 million the state expects to receive through the federal stimulus. Meanwhile, business groups have signed off on the tax increase because it will save the unemployment fund from bankruptcy. Bankruptcy would mean a federal takeover of the fund and result in even higher taxes in the long run. The fund has about $300 million, down from about $600 million before the recession. The compromise plan has been endorsed by Gov. Phil Bredesen and the legislature's Republican and Democratic leaders, who met last week to negotiate details. "This will end up saving money for Tennessee businesses," said Nashville Rep. Gary Odom, the House's Democratic leader. Staving off insolvency The bill is actually two measures rolled into one, each dealing with a separate issue that has emerged as unemployment has rocketed higher in the past year. The legislation's main purpose is to stave off insolvency for the unemployment fund, which is expected to run out of money next year unless taxes are increased. Bredesen outlined a plan to rescue the fund in March by raising taxes six-tenths of a percentage point and increasing the portion of worker pay that is taxed, from $7,000 to $9,000. Republicans agreed to the increases in principle but wanted the bill amended to roll them back once the trust fund is rebuilt. "We think the compromise is an improvement," said Jim Brown, state director for the National Federation of Independent Business, which represents small and independent businesses. "There is more relief at the end of the road for businesses." Meanwhile, the bill also would put into place benefit expansions required by the federal stimulus. Those expansions include giving out-of-work people 20 more weeks of benefits, covering people who are looking for part-time employment and creating an allowance of $15 per child for unemployed parents. The measure also expands eligibility rules governing the amount of time a worker needs to have been on the job, a move that is expected to qualify about 12,000 more people. The stimulus funds would cover those changes in full for at least five to six years, state finance officials said. If the state had opted not to make the changes, it would have been forced to forfeit stimulus funds for unemployment.