Gov. Nixon unsure about accepting $133.2 million in exchange changing unemployment eligibility rules

Several Republican governors were put in a national spotlight by refusing to accept some of the money in the $787 billion federal stimulus plan. Missouri Gov. Jay Nixon, a Democrat, is also reluctant to take some stimulus money aimed at unemployed workers if it increases tax burdens on business, a spokesman said Saturday.

Nixon moved quickly to accept federal funds that will pay for a $25 increase in weekly unemployment checks. The reluctance, spokesman Jack Cardetti said, is whether to accept $133.2 million for changing benefit eligibility rules.

Some leaders of the Republican-controlled Missouri Legislature have already said they oppose any changes in Missouri's unemployment laws to accept the money. That view is shared by the Missouri Chamber of Commerce and Industry and the Missouri State Unemployment Council, an advisory board for policies related to unemployment insurance.

The long-term costs of the required changes, those groups argue, isn't worth accepting the short-term federal funds being offered.

But an unemployed welder from Cape Girardeau, Duane Smith, said relieving the pain of unemployment should be the top concern, not whether businesses might pay more in the future. Smith has been unemployed since January and said the extra $25 in his weekly check has helped. He's not eligible for any extra that would be included in the other changes urged by the stimulus plan but thinks any help for the unemployed is a good idea.

KIT DOYLE ~ kdoyle@semissourian.comAnglea Alford creates a resume Friday at the Cape Girardeau Career Center. The 28-year-old mother of two has been looking for part-time work for several months.

"I think they should be concerned about the people," said Smith, who has been searching for a job while awaiting a callback from Missouri Dry Dock.

The debate comes at a time when Missouri's unemployment fund has run dry of money from state employers. With the state unemployment rate at 8 percent, the fund is borrowing money from the federal government -- $35 million so far and perhaps $1 billion by year's end, according to unemployment council member Stephen Carter. Repaying the federal loans could force a surcharge on employer contributions in future years.

"The conclusion we came to just on Monday was that it is too expensive for us to be able to afford it right now," Carter said.

Nixon needs more information about the strings that will be attached to the money, Cardetti said, but he doesn't want to make businesses pay for the changes.

"The federal government has yet to say that if you were to change the laws, expand benefits and then go back after two years and repeal or do away with them, what would happen," Cardetti said. "The governor is interested if we can put the money into the economy as long as it didn't mean businesses shoulder extra costs."

A mandatory change

One change required to accept the money is not optional: altering what is called the "base period" used to calculate benefit amounts. The state could receive $44.4 million to make the change. To receive the rest of the money, Missouri must also adopt two of four optional changes.

Unemployment compensation benefits are supported by a tax on payrolls. Businesses pay tax rates ranging from zero to 9 percent of the first $13,0000 of each employee's wages. The tax rate is based on how frequently a business' employees use the fund. A newly formed business pays a tax of 3.51 percent.

Most of the optional changes sound reasonable, said Angela Alford, an unemployed mother from Jackson who wants to return to the work force after seven years. Alford used the computers Friday at the Cape Girardeau Career Center, 216 N. Fountain St., in an effort to locate a part-time job. She wants a job she can fit around the schedule of her children, ages 6 and 9, and her husband, Rodney, a car salesman for Bening Ford in Jackson.

One option is to allow benefits for people who only want a part-time job. A person shouldn't be penalized for working part time, Alford said. Another optional change that would increase benefits for workers with children -- by $15 a week per dependent -- makes sense as well, she said.

"Kids are a lot more expensive, especially when they are in school," Alford said. "There are school lunches to pay for, medicine, insurance, and that all costs extra."

Working only when her children are in school or when her husband is at home saves money on child care, she said.

The two other optional changes, allowing benefits to workers in retraining programs for high-demand occupations or for someone who quits a job for a "compelling family reason" that includes escaping domestic violence or taking care of a sick family member, would also help people struggling to meet expenses, Alford said.

Alford agrees, however, that the burden on businesses should be a consideration on whether to accept any or all of the optional changes. "There should be some way to kind of lift the tax burden, some type of tax credit at the end of the year for them," she said.

But workers are hurting as well, she said. "The bottom line is, is this money going to help the unemployed?"

Whether the $133.2 million offered is enough to pay for the changes is a matter of debate. At the low end of an estimate from the Department of Labor and Industrial Relations, the money is adequate. If the high-end estimates are accurate and all four options are accepted, it is not.

The state would receive $44.4 million for changing the base period, but the change would cost $28.1 million to $93.7 million, the department estimated. The stimulus plan has $88.8 million for the optional items, which could cost $23.8 million to $127 million.

One of the optional changes, benefits for people seeking only part-time work, is already essentially legal. When a person files their weekly claim, they are asked if they are available for work and if they sought a job. "If the answers are that she is able to work and available for work, she is being truthful in her response," said Wanda Seeney, spokeswoman for the labor department. "If she provides the number of contacts she made in seeking work, there is no fraud. If the person finds and accepts part-time work, there are no penalties."

'Not the wisest thing'

House Majority Leader Steven Tilley, R-Perryville, said he must study the issues further but that he's inclined against the changes because of the potential for higher taxes on business. "Philosophically, if we are having to change our laws to expand benefits for one-time money, it is probably not the wisest thing to do."

The current situation of the unemployment fund means businesses likely will already face higher taxes to replenish it, said Karen Buschmann, spokeswoman for the Missouri Chamber of Commerce and Industry.

"The state system is broke," she said. "You can't add additional benefits at this time no matter how good the intentions. I would go so far as to say some are not good ideas. It is not a few dollars, and you are not being hardhearted if you are making responsible decisions to bring solvency to the fund."

rkeller@semissourian.com

388-3642

Pertinent addresses:

216 N. Fountain St., Cape Girardeau, MO

Missouri State Capitol, Jefferson City, MO