House Democrats are seeking a compromise on a bill to cut unemployment benefits.

Lawmaker says burden falls on unemployed

One of the few newly elected Democrats in the New Mexico House made an impassioned plea Tuesday against a bill cutting unemployment benefits to workers who lose their jobs through no fault of their own.

House Bill 482, sponsored by Rep. Larry Larrañaga, R-Albuquerque, was filed in response to a new unemployment insurance claim system that took effect Jan. 1 for 45,000 New Mexico businesses.

The system rates existing businesses according to individual records on employee retention over the previous 36 months. It resulted in one-third of business owners seeing increased premiums — some payments increased 200 percent, and one home health care provider said Tuesday it had increased costs for that business by more than $400,000.

Larrañaga said reducing some payouts of unemployment benefits will help bring the system in balance and eventually lower premiums for businesses. That will help retain employees and make New Mexico more competitive, he said.

The bill has strong support from business groups, including the New Mexico Restaurant Association and the Association for Commerce and Industry.

But Democrat Javier Martinez of Albuquerque, who arrived in the United States speaking only Spanish and went on to graduate from law school at The University of New Mexico, said cutting benefits will not guarantee lower premiums, nor would it make a significant difference in the solvency of the unemployment insurance fund.

“It seems to me this is the type of proposal that is placing a heavy burden on people who through no fault of their own are at the lowest point in their life. I’m thinking of construction workers, I’m thinking of oil and gas workers,” said Martinez, who is in his first session as a lawmaker after being elected from Albuquerque’s North Valley to replace Rick Miera, who retired. “I don’t think it’s fair. I don’t think it’s moral. This goes to the heart of morality.”

The bill already has passed the House Business and Employment Committee, and Tuesday’s hearing in House Ways and Means was the last stop before almost certain approval in the full House, where Republicans have the majority.

Martinez said the Republicans have the votes to pass it, but he asked for a more bipartisan approach. He said he would be the first to find other ways to preserve the balance between businesses and employees without cutting benefits.

There was no vote on the measure Tuesday, as members were called to a floor session. But a ranking Republican said they would welcome such a discussion in the next few days.

At issue is the state-run unemployment fund, which is supported by premiums paid by businesses. A worker who loses a job can apply for financial help until he or she gets a new job or is rehired — as is the case with many seasonal workers in landscaping and construction.

Unemployed workers can receive benefits up to 26 weeks. Under current law, the maximum benefit for workers who had been employed full-time is 53.5 percent of what had been the average weekly wage. Under the proposed change, the benefit would be reduced to 45 percent of the average wage. So, if the bill becomes law, a typical worker who made $446 a week would receive $40 less a week, or $160 less each month.

It would only affect those filing for unemployment after July 1.

Martinez said that is a big burden for families who are probably struggling. “That’s coming straight out of that rent, it’s coming out of their grocery allowance, it’s coming out of making the car payment,” he said.

But Larrañaga said the equity issue also involves business owners, who have seen rising insurance costs.

“I see this as a burden to small business,” he said. “You’ve got to look at the other end as well. This is not going to mean any immediate help, it just stands to reason the employer will see a reduction in unemployment insurance.”

Department of Workforce Solutions Secretary Celina Bussey said the insurance fund has a balance of $86 million and is expected to reach $155 million by the end of the year. Before the recession, it stood at $550 million and dropped to $20 million during the worst of the recession. The U.S. Department of Labor has set an appropriate balance for the state at $400 million.

The projected increase in the fund balance is partly due to the new rating system for businesses, which will bring in more revenue, but also the stronger economy — those receiving unemployment in New Mexico dropped from 60,000 to 15,000 over the past few years, Bussey said.

Several business owners — including the manager at a Santa Fe hotel — spoke of how the increase in unemployment insurance payments is cutting into hiring. Others said the proposed change is needed to keep New Mexico in line with other states so workers won’t “game” the system by working just long enough to receive a lucrative unemployment benefit.

Bill Jordan of New Mexico Voices for Children said the fund is growing and that paying a more generous employment benefit to laid-off workers actually helps the economy.

“It pumps money into the economy at a time when the economy needs it. If we cut benefits to workers and the economy doesn’t come back, were hurting business,” he said. “It is an attack on unemployed workers and not necessary for the fund.”

Martinez reiterated that the new premiums are more a reflection of individual business cultures and personnel policies — and the fund itself is healthy.

Bussey said more than 30 states have funds that would be considered insolvent, but New Mexico is not one of those.

“If it’s almost doubling, then why are we considering reducing benefits?” Martinez asked. “Over the course of the recession, our fund remained solvent, while many other states’ did not. As generous as our fund is, as hard as the recession hit us, our fund remained solvent.”