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Do IT this week: Layering
The state wants federal aid for its unemployment compensation fund. Even better? The governor taking the lead to solve the problem
Published on Friday, Nov 28, 2008
No surprise that the fund feels a heavier strain, the unemployment rate at 7.3 percent, the number of Ohioans receiving jobless benefits increasing nearly 60 percent the past year. The fund now has $277 million, significantly below the $587 million of a year ago. Ohio isn't alone. Michigan already has received federal help. Indiana, New York and South Carolina have applied for assistance. Other states face unemployment trust funds running out of cash.
There's little doubt the feds will come to the rescue. Federal law requires that payments reach eligible recipients. Perhaps the Obama White House will direct additional unemployment funds to states. Gov. Ted Strickland has asked for a no-interest loan. As the program currently is structured, states must pay interest if they do not promptly pay back the money.
Recall that Ohio found itself in similar circumstances in the 1980s, borrowing $2.8 billion from Washington, paying $263 million in interest.
What might the state do to avoid such an expensive arrangement? It could act decisively to repair the broken financing of its unemployment compensation fund. It should take such steps no matter how generous the federal government may prove.
This problem didn't suddenly surface. It has been the focus of discussion for years, the train long barreling down the tunnel. As recently as last week, the Unemployment Compensation Advisory Council (with members from labor, business and the Statehouse) announced its latest failed attempt at finding a way to solve the solvency problem.
Predictably, advisory council members pointed fingers. A Republican lawmaker urged the governor to take the lead. The governor's press secretary suggested the council get back to work. In this instance, the governor should take responsibility as the steward of the state and the politician who has declared most powerfully (and rightly) the need to put first the overall interests of the state.
For starters, Ohio should avoid the more costly path of federal assistance. More important, the state has an obligation to assist those who have lost their jobs. All of that invites a compromise.
The unemployment trust fund receives its money through taxes paid by employers, on the first $9,000 of each employee's wages. The national taxable wage base for all states was $11,482 last year. That leaves room for Ohio to make its first such adjustment in 13 years. What might labor provide in return? A temporary freeze in benefit levels? There is the beginning of a compromise. Ready to lead, governor?
Get the full article here.
Comments
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Akron, OH
Posted 02:15 PM, 11/28/2008
What happens when those 'deadbeat parents refusing to work' get help?
It's costing us perhaps many Billions of our tax dollars when uneducated black newbie-of-age decide to earn their keep while producing more of their preemy (before term) children who Hillary and those sympathizers like me who voted for affirmative action
wanted to pay for their baby formulas, baby diapers and their lives up until they die or are in prison? While the rest of us work from dawn until dusk
they lag behind, waiting for jobs they can't keep; waiting for us to pay up for their insistance that we are racially divided due to their contantly 'needing assistance'
for their black brothers
who insist on we white or black workers
that fought to pass the civil rights, anti-poverty laws paying their way...spitting on Dr. King's worthwhile agenda...
Posted 06:37 PM, 11/28/2008
Your report on the bailout for Ohio is only the tip of the iceberg. There are other issues at stake which will create additional taxes for the business community. First, the ODJFS should have fired the idiot responsible for not addressing the issue sooner. They should be continuly revising their projections as far out as five years with worst case scenarios and monitor closely to adjust or notify legislators of the potential changes in the fund. When I work in another state for unemployment we were projecting afar as five years. Someone has not done their job. Ohio and other states saw this in the 80's and many states raised their taxable wages base to as high as $12,000-$15,000 and addressed addtional legislation to provide them with the flexiblity to upward or downward in the future.Now, if the state has to borrow funds the employer could lose their state unemployment credit against federal unemployment taxes. This means the employer will be paying up to $378.00 per employee instead of $56.00. This means a small employer with 10 employees will be paying an additional $3,200 per year in umeployment taxes.Which will mean probably more layoffs. The ODJFS has failed again in their fiscal responsiblity at the expense of the employer.
