Unemployment plan draws ire
Toolbox
By Peter Hirschfeld Vermont Press Bureau - Published: November 5, 2009
MONTPELIER – In a debate that has pit the unemployment benefits of workers against the tax burdens on their employers, lawmakers heard gut-wrenching testimony from both sides Wednesday that will only complicate efforts to reform an unemployment trust fund headed for insolvency before the end of the year.
As Vermont's unemployment fund nears a zero balance, lawmakers and administration officials are looking to restore the trust via a combination of benefit adjustments for recipients and tax increases for employers.
But at a public hearing Wednesday in Montpelier, it became abundantly clear that neither workers nor businesses feel they're in a position to absorb the kinds of measures proposed in the Douglas administration's most recent plan.
"This proposal is very scary to those of us who own businesses in Vermont and, if accepted, could put many of us out of business," said Bill Bauer, owner of the Summit Lodge Restaurant in Killington. "If this law is enacted, more jobs and more salaries are going to go away."
Workers, meanwhile, said cuts in benefits would be equally ruinous for household finances.
"This is one final kick to make it harder and harder for working Vermonters to stay afloat and survive in this economy," Ronald Christie, vice president of a local union chapter that represents Barre's granite workers, told a panel of lawmakers appointed to study the issue.
A plan offered by the Douglas administration last week would, officials say, distribute the pain equitably between employers and beneficiaries. Businesses would see their unemployment tax burdens rise by some $84 million over the next four years, while payments to recipients would drop by more than $90 million over the same time period.
The plan calls for a number of significant revisions to the existing system; however, the bulk of the revenue growth would come from an increase in the taxable wage base for employers. Most of the savings, meanwhile, would come from a reduction in the maximum weekly benefit, from $425 to $400, as well as the institution of a one-week waiting period for benefits for the newly unemployed.
The Legislature, which froze maximum weekly unemployment benefits at $425 and increased the taxable wage base by 25 percent before adjourning last session, has yet to put a proposal on the table.
But if the fiscal exercise is about sharing the pain, as administration officials and lawmakers so often say it is, then workers and businesses fired back Wednesday that there's already enough to go around.
"The reality of this is there's just not enough work to go around," said David Duell. "Don't make it worse by taking away what little we do have right now."
Duell, a South Burlington father of two, was laid off in January from a job that paid him $56,000 a year and has been unable to find work since. Trying to get by on $425 is difficult enough already, he said.
"Without any income and the little I receive from unemployment benefits, it is a struggle to get by," he said. "I'm eating through retirement savings slowly but surely and can no longer afford to purchase health care coverage for my family."
Other workers said even at current benefit levels, they teeter on the brink of financial disaster. A cut in benefits, they said, will force many of the 24,000 people receiving unemployment benefits to seek state-subsidized services and only intensify Vermont's fiscal troubles.
But as workers decried plans to cut benefits, employers sounded the alarm over tax increases.
Bauer started working at Killington's Summit Lodge restaurant in 1977 as a dishwasher.
"I worked my way up the ranks, saved money, and approximately five years ago I bought the business," Bauer said.
Dropping revenue and rising costs have conspired to erode the business' bottom line in recent years. Now, Bauer said, he finds his business under attack from a new threat of unemployment insurance.
Under the administration's proposal, according to Bauer's calculations, his contributions to the state's unemployment fund would rise some 350 percent over the next four years, up to $87,000 annually, and effectively put him out of business.
Gilles Moreau, a South Barre man who started M&M Beverage in 1978 and now owns five stores in the central Vermont region, told a similar story.
Increases in the taxable wage base would eat into revenue he would otherwise invest in payroll and expansion, Moreau said.
"We're the guys putting into the fund to start with and we're the guys keeping people employed … and we're doing our darnedest to keep it that way," Moreau said.
Raising taxes on business, he said, will only exacerbate the unemployment problems that helped deplete the fund in the first place.
40