Lawmakers delay fix for Ohio's jobless system
State at risk if another downturn hits economy.
Despite repeated promises, Ohio lawmakers just can’t come up with a fix for the state’s unemploy- ment-compensation system.
The General Assembly recessed for the holidays last week, with the fund that pays jobless benefits still woefully underfunded and poised to go broke within months should even a mild recession hit. That would mean the state would again borrow from a federal loan fund to pay unemployment benefits.
The inaction came despite a directive from House Speaker Cliff Rosenberger this month that he wanted a bill to overhaul the system out of committee and ready for a vote by the end of the year.
Sound familiar? It should. Lawmakers kicked the can last year, too.
Rep. Kirk Schuring, the House’s second-ranking Republican who led a year- long effort to forge a com- promise between business and labor, said he’s not giving up on getting both sides to agree on a solution.
“I’m still working with the interested parties, but I do not have an agreement,” said Schuring, of Canton.
“It seems like both sides would like to have it 100 per- cent their way ... but I’m still working on it. I’m not giving up.”
Ohio’s unemploy- ment-compensation system is financed by taxes paid by employers — a federal tax to cover administrative costs and a state tax paid into a trust fund to provide up to 26 weeks of benefits to jobless workers.
But analysts have long warned that Ohio’s fund has insufficient reserves. After the Great Recession hit in late 2007, the state borrowed $3.4 billion from the federal government to pay jobless benefits.
The state paid $257 mil- lion in interest on the loan and, because the debt was not repaid within the federal government’s two-year grace period, businesses paid higher federal unem- ployment taxes from 2012 until last fall, when the loan finally was paid off.
For years, lawmakers have tried unsuccessfully to fix the system. When the most recent round of negotiations with business and labor lead- ers failed to reach a compromise earlier this year, Schur- ing introduced a bill that he said would bridge the differ- ences and shore up the fund with equal contributions from business and labor.
S churing’s House Bill 382 would generate about $370 million a year from 2019 to 2030 by raising the taxable wage base paid by employers to $11,000 per employee, up from $9,500. On the employee side, work- ers would pay a new co-in- surance payment of 10 per- cent of the amount paid by the employer. In addition, benefits would be frozen for 10 years, the maximum number of weeks paid cut to 24, down from 26, and additional payments for dependents reduced.
“We need to have a plan for solvency because as it stands today, if we have another recession and people are on unemployment rolls, the fund can only sustain a few months of benefits,” Schuring said. “They would still get their money, but then we’ll have to borrow from the federal government and the busi- nesses would have to pay the surcharges, which are much more than what is being proposed by this bill.”
Though business and labor groups agree there is a prob- lem, a solution is a bitter pill for either to swallow because it would cost both sides.
“Our goal has been to help achieve a solvent trust fund, and I remain hopeful that dif- ferences between business and labor can be resolved at a future date,” said Matt Szollosi, executive director of Ohio’s Affiliated Construction Trades.
A less-controversial resolution and companion to the bill would create a bond fund for the state to borrow from if the insurance fund is depleted, avoiding the need for a federal loan. Schuring said last week that he is opposed to adopting the resolution without the bill because it could create a disincentive to fixing the system.
“As we sit right now, there’s no problem. But the problem will become much bigger, much quicker” if the fund is depleted, said Andrew Doehrel, president of the Ohio Chamber of Commerce.
“Nobody wants to play with fire.”