MONTPELIER — State Auditor Tom Salmon flexed his political independence from the Vermont Democratic Party this week as he suggested lowering the maximum weekly benefits check for the unemployed to $300.

Salmon, who left the Democrats behind and joined the Vermont Republican Party earlier this month, told a legislative committee Tuesday that lowering the total amount that unemployed workers receive is a sure way to fix the deficit the fund is facing.

Vermont's maximum weekly unemployment check right now is $425; the unemployment trust fund in Vermont faces an estimated budget hole of $165 million at the end of 2010.

"We need to make some very brave decisions and we need to make them soon," Salmon said on Wednesday, when reached at his Montpelier office. "Reducing the maximum benefit check to $300 puts us in line with states like Missouri, Nebraska and South Dakota."

Salmon made the comments Tuesday before the Unemployment Trust Fund Reform Study Committee, a group of legislators charged with finding a way to fix the growing budget hole in the state's unemployment fund account.

That fund is scheduled to go bankrupt in January, making it very likely the state will take up the Obama administration on its offer of interest-free lending for state unemployment funds for one year. But observers say there needs to be a clear plan to shore up the fund long-term.

Doing nothing will likely result in a $400 million hole by the end of 2013, according to Patricia Moulton-Powden, the commissioner of the Vermont Department of Labor. She said the fund needs to be built up to around $300 million in order to weather the next cyclical recession.

"We don't just need to balance that fund, we also need to build it up," she said Wednesday. "If we face another recession in seven to 10 years, we'll need those extra funds to get through that."

Salmon's suggestion that reducing the maximum weekly unemployment check to $300 would put Vermont on the lower spectrum among other states confronting high numbers of residents out of work. According to state-by-state numbers from earlier this summer, only seven other states would have lower caps on unemployment benefits.

In New England, maximum weekly unemployment benefits range from $405 in New York State to $942 in Massachusetts. New Hampshire's weekly unemployment check is capped at $427; Maine's is $516; Connecticut is $594 and Rhode Island is $660.

Salmon said a maximum $300 weekly unemployment check was what the state offered in 2000.

"We can't just keep on cutting $9 here and $12 there from the unemployment benefits," said Salmon, adding that such a reduction that he is recommending would need to be announced at least nine months before it took effect. "That's not going to cut it."

Advocates for the unemployed in Vermont were shocked at Salmon's suggestion. Christopher Curtis, a staff attorney for Vermont Legal Aid, said the state auditor's proposal to "pick the pockets of laid off Vermont workers during the worst recession in memory is not a serious proposal.

"Unemployment benefits are the fastest bridge to finding new work," Curtis said. "It keeps a roof over the heads of families, or makes a car payment, or pays a health insurance premium — all of which ensure a basic measure of economic stability so Vermonters can get back to work as soon as possible.

"It is hard to understand how destabilizing Vermont's workforce will help solve the unemployment funding crisis," Curtis said.

Salmon's position clearly puts him at odds with Vermont Democrats, who are mostly hesitant to raise unemployment taxes on business or to cut into weekly checks. But it also puts him at odds with Vermont Republicans, who have suggested much more modest adjustments.

Moulton-Powden said Gov. James Douglas' administration has suggested a plan that would increase employers' contributions to the trust fund and reduce the cap on weekly checks from $425 to $409.

"That is not what we would recommend," Moulton-Powden said, when asked about Salmon's idea. "We think that is too deep of a cut."

When asked if he believes that an average Vermonter could live off of $300 a week, Salmon said "no." But he quickly added that unemployment checks should not be seen as a form of income, but a "lifeline to the next job."

Job growth in Vermont has historically been slow, but since the global recession hit more than a year ago, it has been practically nonexistent.

A July 2009 report by the Vermont Department of Labor found that the state has been losing more jobs than it has gained since June 2008. In June of this year, the state's job growth was negative 3.5 percent. Manufacturing jobs, for example, were down 13 percent that month.

Salmon said he did not know if reducing the maximum unemployment checks to $300 would completely fill up the budget gap in the fund and he was unsure if it should be coupled with increasing the taxes employers pay into the fund.

"Ultimately, it will be up to the Legislature to decide what to do," Salmon said.

daniel.barlow@timesargus.com