Ducey seeks bailout on jobless benefits
also seeks liability protection for businesses, schools and health care workers affected by COVId-19
PHOENIX – Gov. Doug Ducey wants Congress to bail out the state’s rapidly depleting unemployment trust fund and provide liability protection for businesses, schools and health care workers affected by the coronavirus crisis. He also wants to extend the special federal unemployment benefits – but not necessarily at the same level as now.
The requests come in a letter the governor sent to the state’s two U.S. senators and nine representatives as they weigh what’s being dubbed Phase 4 of the relief package.
The most immediate concern is that the extra $600 a week being provided by the federal government in jobless benefits expires this coming week. That would leave those still out of work here with no more than $240 a week in state benefits.
Ducey has repeatedly sidestepped the question of raising the state benefits cap, which is the second lowest in the nation, saying that Arizonans are protected by that extra $600 a week. In his letter, the governor asks Congress to extend what’s called the Federal Pandemic Unemployment Compensation, though he does not say for how long.
He is not convinced $600 is the right number.
“We understand the concerns from businesses that are having difficulty rehiring employees when the government pays more in unemployment benefits compared to what they were paying their former employees before the pandemic,’’ Ducey wrote. What he wants instead is some sort of cap that would be equal to what they were earning before, but not more than $600.
That mirrors the position of the Arizona Chamber of Commerce and Industry.
“These workers who have lost their job or been furloughed have absolutely no responsibility for their situation,’’ said Glenn Hamer, the organization’s president. “This is 100 percent pandemic-related.’’
But he said the current assistance levels make no sense.
“Somewhere between 50 percent and two-thirds of the people who receive this $600 ‘top off’ nationwide – I can’t say this is happening in Arizona – are making more than they did while they were employed,’’ Hamer said. “That has created an issue for certain employers given that some workers can make more not working than being on the job.’’
His preference, like that of Ducey, would be to put in a cap equal to what people were making before.
Anyway, Hamer said it’s not like this is all that out-of-work Arizonans will be getting. He said he expects Congress to repeat its action from earlier this year and send $1,200 checks out to individuals.
It’s not just the federal side of the payments to Arizonans that concerns the governor. There’s the rapidly depleting trust fund that finances those weekly $240-maximum checks from the state.
That fund is fueled by a tax paid by employers on the first $7,000 of each worker’s salary.
The levy on each company depends on how often workers are fired or laid off and end up collecting benefits as well as the average size of the payroll. Rates can be as low as 0.05 percent and as high as 12.85 percent.
The fund is designed to be self-correcting to maintain a balance. But the pandemic has changed all that.
Consider: In March, there was $1.12 billion in the fund, a level that had been pretty much steady for years. By last week it had dropped to $686 million.
“Our original trust fund balanced projection contemplated a different policy and economic environment than what we face today,’’ Ducey said.
Officials from the Department of Economic Security say the current balance is dropping by about $40 million a week. So, at that rate, the fund will go broke right around Election Day.
To prevent that, Ducey wants $1.5 billion in federal dollars. The alternative would be a special assessment on what the governor said are “already struggling businesses.’’
That happened before, in 2010, when the fund went broke after the state’s jobless rate topped 11 percent. The situation was so bad the state had to borrow money from the U.S. Department of Labor, going nearly $600 million in the red at one point.
The result was a surcharge on employers to pay off that note, one that reached $42 per worker, a levy Ducey wants to avoid this time around.
The governor also wants something else for Arizona businesses: liability protections.
He’s already done some of that by executive order, but only for the health care industry. It covers licensed health care workers, emergency medical technicians and health care institutions who are acting “in good faith’’ to comply with COVID-19 protocols. Exceptions would be cases of gross negligence, reckless or willful misconduct, or being under the influence of alcohol or drugs.
Now he wants those protections extended not only to schools but also businesses.
“We have seen that these groups are taking extraordinary measures to provide the safest possible environments for their customers and students as states phase in their reopening plans,’’ Ducey wrote to Congress. “We want them to be provided as much certainty as possible in such an uncertain time.’’
Daniel Scarpinato, Ducey’s chief of staff, said his boss believes there need to be protections for both public entities like schools and private businesses who are following the guidelines issued by health officials and have “been responsible.’’
“There should be an approach to make sure that we don’t see frivolous lawsuits that run wild,’’ he said. Still, Scarpinato said, he cannot say at this point where the line is between legitimate actions that should be allowed to go to court and those that are frivolous.
“That’s exactly what should be looked at,’’ he said. “We should be very mindful of looking at existing law, looking at what kind of liability protections have been done in other scenarios and being thoughtful about it and not necessarily rushing into it.’’
In fact, Scarpinato said, the complexity of the issue is part of the reason the Arizona Legislature hasn’t taken up the issue.