House Rejects Unemployment Compensation Legislation

State business leaders say a failed House bill to reform unemployment compensation must be reconsidered, if Pennsylvania is to remain competitive.

The House bill, HB 916, "is the only piece of legislation that will bring the (unemployment compensation) fund to solvency without a tax increase,” said Kevin Shivers, state director of the National Federation of Independent Businesses – Pennsylvania. This nonpartisan nonprofit advocates on behalf of small and independent businesses, according to its website.

“We’re trying to get Pennsylvania’s economy back on track. The last thing we want to do is raise taxes on employers, or workers for that matter,” he said.

The state House rejected HB 916 on Tuesday by a vote of 79-122. Thirty Republicans joined Democrats in rejecting the legislation. State Rep. Scott Perry, R-Cumberland, who introduced HB 916, was granted a re-vote on his bill Tuesday, which will be reconsidered Wednesday.

Opponents argue recalculating benefits in the unemployment compensation reform legislation would mean reduced benefits for recipients.

“There’s a recalculation of the benefits, which actually becomes a reduction,” said David Fillman, executive director for the American Federation of State, County and Municipal Employees Council 13, the largest public employee labor union in Pennsylvania. “We have a problem with the amount of unemployment, and doesn’t that mean we’ve got folks not working? We find it very difficult to have this even being on the floor, but apparently it’s out there.”

But for taxpayers, the real cost may be $582 million if HB 916 does not pass eventually.

That's because HB 916 is projected to save $632 million annually, according to the state Department of Labor and Industry. The alternative unemployment compensation bill, SB 1030, is projected to save $50 million annually by changing the maximum weekly benefit, requiring active work searches by recipients, and delaying the benefit year start date until unemployed workers exhaust their severance pay package that exceed 50 percent of the statewide average annual wage.

HB 916 includes the same reform provisions as the Senate bill, but also addresses Pennsylvania’s $3.8 billion unemployment compensation debt to the federal government, which is being repaid. The measure also works toward making the unemployment compensation trust fund solvent by 2018 without increasing payroll taxes for employers and employees.

Additionally, HB 916 would redefine "credit week" to eliminate some recipients, redefine the weekly minimum benefit rate from the past 12 months to the past 36 months, and reduce the duration of claims.

The Senate's version, SB 1030, does not address Pennsylvania’s unemployment compensation debt and is not intended to address the question of solvency, said state Sen. John Gordner, R-Columbia.

Instead, Gordner said, his legislation is meant to reform Pennsylvania’s unemployment compensation before June 11, a month after the Pennsylvania Department of Labor and Industry was notified by the federal Department of Labor that recipients would no longer be eligible for an additional 13 weeks of federally funded unemployment compensation.

This was triggered when Pennsylvania fell below the 8.5 percent floor set by the federal Department of Labor. Gordner said that if Pennsylvania does not reform its unemployment compensation law before the June 11 deadline, approximately 45,000 Pennsylvanians will be affected.

“It’s a modest proposal,” said Gordner, “and (it) would save the unemployment compensation trust fund about $50 (million) to 60 million per year. It is not an attempt to deal with the unemployment compensation trust fund solvency issue because of the limit time we have to get a bill through the General Assembly and to the governor.”

SB 1030 passed the Senate unamended Tuesday and now heads to the state House.

Sam Rohrer, state director for Americans for Prosperity – Pennsylvania, a grassroots conservative organization, said the most important issues for taxpayers are paying off the state’s debt, including from the unemployment compensation fund, and avoiding higher payroll taxes on employers and employees.

“A large percentage (of state debt) is underfunded pensions, but ($3.8) billion belongs to the unemployment compensation (fund),” he said. “(The legislature and governor) can’t kick the can down the road. They must step forward and pay that off, because ultimately the taxpayer is dramatically harmed if the state does not pay off the debt. … It must happen.”

Rohrer, a state legislator from 1993-2010, left the state House after a failed bid for Pennsylvania governor this past year.

The NFIB's Shivers said while SB 1030 is a “good start,” the legislation does not “go far enough, and it’s going to result in employers facing massive tax increases.”

Sam Denisco, director of government affairs for the Pennsylvania Chamber of Business and Industry, echoed Shiver’s statement.

“The Senate bill needs to go further,” said Denisco. “The House bill, we believe, encompasses the reforms to unemployment compensation law that will bring the unemployment compensation trust fund to solvency … and reduces our loan balance to the federal government to zero.”

House Majority Leader state Rep. Frank Dermody, D-Allegheny, said Tuesday that Democrats successfully led the way in “protecting workers,” when HB 916 was rejected on second consideration.

“Pennsylvania workers won an important victory today when the House resoundingly defeated a bill that threatens their security,” Dermody said. “By restricting eligibility for unemployment compensation and deeply cutting benefits, this bill would take away the lifeline that thousands of workers depend on to survive when they lose a job through no fault of their own.”