A Vermont House committee has moved to increase benefits for unemployed workers by $25 per week in an effort to ensure that a controversial unemployment insurance bill, S.10, has the support to pass this year.
As it originally passed the Senate, S.10 would have delayed an expected hike in unemployment insurance taxes on businesses. This tax increase had been driven largely by the increased demand for benefits during the Covid-19 pandemic.
The Senate’s bill also included a provision that would have introduced a new $50 weekly payment for people receiving unemployment benefits who claim dependents.
Last week, the Vermont House Commerce Committee jettisoned the Senate’s proposed dependent benefit.
And instead of delaying the expected tax increase, the panel decided to remove the year 2020 from the calculations used to determine unemployment insurance tax rate schedules. This move is estimated to save businesses about $400 million in the long run.
But on Thursday, in a unanimous vote, the committee approved a measure tacked onto another bill, S.62, that would hike unemployment insurance taxes on business by $100 million in the coming years to increase benefits by $25 per week.
Rep. Michael Marcotte, R-Coventry, the chair of the committee, said that he doesn’t support the measure. But he believes that the bill wouldn’t have a path forward in the Legislature unless it included an increase in benefits.
Without one, he said it would end up “dead” in a conference committee with Senate lawmakers.
Marcotte said he wants to ensure that businesses don’t have to bear the $400 million burden they would face if the state didn’t change unemployment insurance calculations.
“It just makes a lot more sense to me than just to say on principle, ‘No, I’m not doing this, and I’m going to let the business world get taxed for the next 10 years over $400 million (more) than they need to,” he said.
Under the proposal, the added $25 benefit would kick in this October, 30 days after the federal government’s expanded $300-a-week unemployment benefits expire.
The added benefit would last until the $100 million runs out. According to one estimate, that could be 13-15 years, Marcotte said. But depending on the demand on the unemployment system, it could be shorter.
Under current law, the maximum weekly unemployment benefit is $531.
David Mickenberg, a lobbyist for Working Vermont, a coalition of public- and private-sector unions, praised the proposed increase in benefits. He said S.10 now “strikes an important balance” and recognizes both the needs of employers and Vermonters who have struggled during the pandemic.
“I think it’s a meaningful step forward that demonstrates the need that’s out there to support those looking to transition back into the workforce, particularly when the federal benefit ends,” Mickenberg said.
But the measure has been criticized by the business community.
Speaking to the commerce committee, William Driscoll, a lobbyist for the Associated Industries of Vermont, said the proposal is “arbitrarily adding $100 million in additional spending that will be paid for entirely by higher taxes on employers.”
“There’s no rhyme or reason to the $100 million amount. So that’s very troubling in this context of where we’re trying to avoid over-taxing employers and collecting unneeded taxes for our (unemployment insurance) benefit system,” Driscoll said.
Michael Harrington, the commissioner of the Vermont Department of Labor, said he was also opposed to increasing the benefits and burdening businesses with tax hikes.
“I don’t think that’s desirable in this circumstance, given that we need employers to be successful in order to ensure that Vermonters have jobs,” Harrington told a joint hearing of the commerce committee and the House Committee on Ways and Means.
Rep. Janet Ancel, D-Calais, the chair of the ways and means committee, which also worked on the benefit proposal, told lawmakers that she appreciated the “willingness and interest in creating a bill with balance.”
“We need to do something on the beneficiary side, and I feel that $100 million over whatever period of time it takes to send the money out is that,” Ancel said.
