TOPEKA — The House Commerce and Economic Development Committee on Monday was getting a primer on a plan to repay more than $120æmillion that the federal government loaned to the state to make payments to unemployed workers during the recession.
The state’s Unemployment Insurance Trust, into which employers pay, was tapped out when the state paid more than $1.2 billion in unemployment benefits in 2009 and 2010. Kansas was forced to take federal advances on loans during the recession.
Congress waived the interest on the loans during 2010, but will begin to collect from the 36 states that borrowed money starting Sept. 30. Because loans can’t be repaid out of the state’s unemployment insurance fund, Senate Bill 77 would create a separate fund to pay off the debt.
To generate money to pay back the loan, the bill would increase the taxable wage base over the next three years from $8,000 to $11,000, meaning employers would have to pay unemployment insurance tax on more of the income earned by each employee. The Department of Labor estimates this could generate $238 million in additional revenue over three years.
Among other steps to pay off the debt, the bill would repeal a provision instituted in 2007 that allows people to collect benefits during the first week of their unemployment. The “waiting-week” provision would save the state about $11.5 million, according the Department of Labor.
SB 77 would also modify the current policy by which spouses of people who move to take a different job are eligible for unemployment. The “trailing spouse” provision would now apply only to spouses of personnel in the military.
Andy Sanchez, of the AFLCIO, said that while he understands the need to pay back the loans, he encouraged the committee to not institute the waiting week or to take away the trailing spouse benefits.
The committee will hear more testimony today and plans to pass a final version of the bill on Wednesday.
Bill Goodlatte, senior vice president for human relations at Wichita-based LDF Cos., told the committee that he didn’t think the system, in which companies who have a positive balance in the State’s Employment Security Trust Fund nevertheless get hit with higher rates, is working properly.
“A system that allows some employers to pay out up to 6.5 times more in benefits than they pay in, while we pay in more than three times as much as we pay out, makes absolutely no sense,” Goodlatte said.
Goodlatte’s company has a positive balance of more than $800,000 in the trust fund, yet is seeing its rate of unemployment tax go up by 93 percent.