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Unemployment Insurance Fund will knock businesses right back down

By State Representative Dan Leonard

As our nation continues to crawl its way out of the worst economic hole since the Great Depression, many businesses are beginning to stand on their own feet again. But, recent legislation to increase taxes on employers’ contributions to the Unemployment Insurance Fund will knock businesses right back down again.
One thing every Hoosier business owner has in common, whether they are thriving or surviving, is the cost of unemployment insurance premiums for each employee. Due to our country’s recent economic struggles the Unemployment Insurance Trust Fund has taken a major hit.
The Unemployment Insurance Fund is currently operating under a $1.5 billion deficit, forcing the State of Indiana to borrow the money from the federal government to cover unemployment benefit payments. The money loaned from the federal government must be repaid. The Unemployment Insurance Fund is paid for totally by employers.
In an effort to shore up the fund, during the 2009 legislative session, the House Democrats passed one of the biggest tax increases in state history for businesses on their Unemployment Insurance premiums. That legislation passed without one House Republican vote.
Now, my House Republican colleagues and I are calling for the General Assembly to pass Senate Bill (SB) 23 delaying the tax increase for one year. Instead of addressing the needs of the unemployed, the House Democratic Majority has chosen to play election year politics with SB 23. This is a time when businesses are already struggling due to the economy, and we do not need to add an additional tax burden to employers. Passing SB 23 is the number one thing the General Assembly can do to grow and create jobs.
If the tax delay does not pass, then  approximately 80,000 small, medium and large businesses employing over two million Hoosiers would see a tax increase ranging anywhere from $9-748 per employee. This tax increase does not create a positive hiring environment for employers.
For the last two sessions, I have been a member of the House Labor and Employment Committee as the Ranking Minority Member. This week our committee heard SB 23, the legislation that delays unemployment tax increases. Unfortunately, House Democrats placed an amendment on the bill loaded with “poison pills.”
The amendment to SB 23 reduces property taxpayer protection by raising the floor for referenda by 50%.  For example, an elementary school project costing taxpayers $14.9 million in increased property taxes is subject to a referendum today.  Under the terms of this amendment, citizens would no longer have that protection.  At a time when far too many of my constituents are unemployed or underemployed, I cannot in good faith support stripping away property taxpayer protection.
The amendment also creates an increase to unemployment benefits so no one receiving the maximum can earn less than $390 per week or $10.37 an hour. Currently, 40 percent (or 104,000) unemployed Hoosiers are drawing from the maximum benefits. This part of the amendment would only give benefit increases to those receiving the maximum allotment.
In addition, it would remove the requirement to apply for a job on a weekly basis. This means unemployed Hoosiers could receive unemployment and not be asked to search for a job.
As we finish the 2010 legislative session, be assured that I will continue to fight for Indiana employers and unemployed Hoosiers by creating jobs and passing legislation to delay the unemployment insurance tax increase. We need to create an atmosphere to encourage job creation and to get unemployed Hoosiers back to work. It is time to put party differences aside and work together for these goals.


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