Unemployment compensation stumps Ohio lawmakers

11/24/2017

From left: Budget Director Tim Keen, House Speaker Cliff Rosenberger (R., Clarksville), Gov. John Kasich, Senate President Larry Obhof (R., Medina) talk about cuts to the proposed next two-year state budget.

The Blade/Jim Provance
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COLUMBUS — Nearly a year ago, legislative, business, and labor leaders vowed to finally hammer out an elusive compromise on how to restore long-term solvency to the state’s recession-rattled unemployment compensation system.

Late last year, lawmakers and representatives of business and labor imposed a temporary patch to the system while they worked on what they said was a deal that was close at hand.

But April’s target date for an agreement came and went. It became clear business and labor could still not agree on how to shore up the trust fund before another recession depletes its assets and it again has to borrow billions from the federal government to meet its obligations.

Rep. Kirk Schuring (R., Canton), who had been spearheading the talks, ultimately took what he gleaned so far and introduced proposed legislation to force the issue back onto the legislature’s table.

House Bill 382 would raise taxes on employers, require workers for the first time to contribute financially to the system, and reduce benefits for the unemployed.

A separate resolution would ask voters to allow for the issuance of taxpayer-backed bonds the next time the fund dips into the red. Businesses like that idea, given that the federal government in the past recouped what it provided to temporarily prop up the system through surcharges imposed on employers on top of what they already pay.

Both business and labor agree the bill is better than the failed attempts that preceded it. But both still find fault and will not sign on. No measure is expected to reach the governor’s desk this year.

“I don’t believe we’ll get it done before Christmas, but I do think we need to continue working on the unemployment compensation issue,” Senate President Larry Obhof (R., Medina) said. “That’s something that’s been around for more than a decade that continually gets punted from one General Assembly to the next.”

The business community doesn’t like the measure because it believes it doesn’t cut jobless benefits enough. And while the measure would introduce a new tax on employees to share the financial responsibility of funding the system, businesses don’t like the red tape involved in the payroll deductions.

“Any workable solution must address both spending and revenue to balance the cost of benefits with employer contributions, and simply pouring more money into the system without addressing benefits undercuts Ohio’s job-creating economic competitiveness,” reads a letter submitted to the House Government Accountability and Oversight Committee in opposition to the bill in its current form.

It was signed by the Ohio Chamber of Commerce, Ohio Manufacturers Association, Ohio Council of Retail Merchants, Ohio Farm Bureau, and the National Federal of Independent Business.

But labor and other critics argue that the measure still puts too much of the responsibility for balancing the system on the shoulders of unemployed workers, who would see their maximum length of benefits eligibility reduced from 26 to 24 weeks and would see maximum dollar benefits frozen at current levels through 2028.

“In fashioning a solvency solution, the General Assembly should keep in mind the main reason why we have a solvency problem in the first place,” Policy Matters Ohio, a left-leaning think tank, told the House committee. “Employer taxes have been set too low.

“This underfunding has benefited employers during stable times, even while benefits for claimants have not been extravagant,” it said. “In fact, many low-wage workers have been unable to participate in the system, helping to keep employer taxes low. Their continuing sacrifice should be considered in evaluating the overall fairness of any proposal.”

Even with the changes proposed in the bill, the fund would likely not reach the lowered expectations of what would constitute solvency by 2030.

“Nobody’s going to like it,” House Speaker Cliff Rosenberger (R., Clarksville) said. “We can try all we want, but all sides are not going to like it. That’s what legislating is all about. You can’t make everybody happy.”

Among its numerous provisions, the bill and accompanying resolution would:

● Require employers to pay unemployment taxes on the first $11,000 of an employee’s pay, up from $9,000 currently and $9,500 as of Jan. 1.

● Require employees for the first time to contribute, paying about 10 percent of what their employers pay, through payroll deductions once they have been on the job for 20 weeks.

● Ask voters to approve a constitutional amendment allowing for taxpayer-backed borrowing to continue paying benefits or finance debt taken on by the system when another recession drains its assets.

● Continues an existing two-year freeze on the maximum weekly benefit an unemployed worker may receive for 10 more years.

● Reduces the number of weeks most unemployed workers may receive benefits from 26 to 24 weeks. Those furloughed because of weather conditions may still receive up to 26 weeks.

Contact Jim Provance at jprovance@theblade.com or 614-221-0496.