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THURSDAY, JANUARY 13, 2011   (printable PDF version)

Balance the U.I. tax cut with aid for children

The 2011 session of the Washington State Legislature began with Gov. Chris Gregoire and legislative leaders in both parties warning people: brace yourselves, we're gonna bring the pain.

Check out the Washington State Labor Council's Economic Recovery Agenda for 2011 session of the State Legislature, which began this week.

This year's 105-day session will be dominated by what the governor hopes will be "bold" solutions to the projected $5 billion revenue shortfall. She's certainly proposed a few. Revamping control of the state's public education and ferry systems, ending the Basic Health Plan for low-income workers, and for our state's beleaguered public employees, yet another dramatic round of facility closures, pay reductions, benefit cuts, and layoffs.

On behalf of our 500 affiliated labor organizations, representing some 400,000 rank-and-file union members, the Washington State Labor Council will be reporting -- and opining -- upon these issues as the session progresses.

But, in this first edition of our weekly Legislative Update newsletter, we want to address Unemployment Insurance. A fast-tracked U.I. proposal is scheduled for a hearing Friday (tomorrow) at 8 a.m. in the House Labor and Workforce Development Committee and Monday (MLK Day) at 10 a.m. in Senate Labor, Commerce and Consumer Protection.

What's the hurry? Unless changes are made by Feb. 8, employers will get an average 36% increase in their U.I. premiums this year. In the spirit of "bipartisanship" that seems to be prevailing early this session, we won't dwell on the fact that the U.I. tax structure was written by the business community itself in 2003 -- and that it was opposed by labor because it would be too volatile and subject to spiking during times of high unemployment. We won't talk about that.

The governor has proposed, and Rep. Mike Sells (D-Everett) has introduced, legislation to avoid that rate increase by tapping the $2 billion, 14-month cushion in the U.I. Trust Fund reserves. The proposal is to permanently cut U.I. tax rates for employers at a cost to the Trust Fund of $478 million from 2011-17. According to the Employment Security Department, almost all employers would avoid the 2011 tax increase, and about half of them would actually pay less this year than in 2010. As a sweetener, the proposal calls for some modest positive changes in training benefits, at a cost of $118 million.

A COALITION OF UNIONS AND ORGANIZATIONS advocating for families suffering from unemployment (see the list below), led by the Washington State Labor Council, is proposing an alternative more balanced approach to U.I. changes that recognizes the shared struggles of businesses, families and communities, and helps us all weather the continued hardship caused by a weak national economy.

While we believe that the governor's initial proposal is a good start to this discussion, it is not the best path to economic recovery. Its modest improvements to training benefits fall short of what is needed to address the immediate needs of families in crisis and our state economy. For every U.I. Trust Fund dollar dedicated to improved training benefits, the permanent business tax cuts would cost the system more than $4.

Amid dramatic budget cuts in social services, we strongly believe MORE must be done for families struggling to put food on the table and keep a roof over their heads. Thanks to the relative health of the U.I. Trust Fund, this may be the only opportunity this year to do something positive for struggling families, while also avoiding a U.I. rate increase for employers.

Attend the U.I. hearings!

The governor's initial Unemployment Insurance proposal is set for a hearing Friday (tomorrow) at 8 a.m. in the House Labor and Workforce Development, and Monday (MLK Day) at 10 a.m. in Senate Labor, Commerce and Consumer Protection. Make plans to attend to explain the importance of maximizing relief for businesses AND families suffering unemployment.

Therefore, we propose coupling lowered U.I. tax rates with a children's benefit of $15-per-week per child. In doing so, Washington would join 14 other states that are accessing federal U.I. modernization funds ($98 million) to target U.I. benefits to families struggling to provide for their children's basic needs with a dependent allowance. This children's benefit, which would cost the U.I. Trust Fund an estimated $202 million between 2011-2017, is absolutely necessary to balance a proposal that dedicates significantly more of that fund to permanent tax cuts for businesses.

While the improvements to training programs are good policy, they won't help many people on the ground. The dependent allowance would help far more people in a more tangible way. Relatively few workers -- an estimated 1,900 people -- would qualify to access the enhanced training benefits, plus over-enrollment and budget cuts at community colleges make training programs even less accessible. Recipients would merely receive a weekly unemployment check while attending school. With tuition and other costs skyrocketing, few will be able to afford tuition, books, child care, rent, gas, food and other living expenses on the average weekly benefit of $369.

WITH UNEMPLOYMENT REMAINING over 9%, we are all struggling. The best way to stimulate the state economy is to use our U.I. Trust Fund to maximize relief and recovery for businesses and for working families. An estimated one-third of U.I. recipients have children suffering the consequences of the lingering high unemployment rate. A dependent allowance of $15 per dependent per week (with a maximum of $50 a week) would help about one third of all workers receiving unemployment -- an estimated 167,000 people -- and would inject $202 million into the state's economy. Given that every $1 of benefits creates $2 of purchasing power in local economies, this dependent benefit would create more than $400 million in economic activity in every community in the state.

The WSLC-led coalition of organizations supporting this more balanced approach includes the Children's Alliance, Statewide Poverty Action Network, Unemployment Law Project, Northwest Harvest, Washington Community Action Network, Food Lifeline, Welfare Advocates Group, Washington Chapter of the National Association of Social Workers, ElderCare Alliance, Lutheran Public Policy Office, Legal Voice, and the Washington chapter of the National Organization for Women, plus many labor organizations, including WFSE/AFSCME, IAM District 751, WEA, AFT-Washington, Washington Teamsters, Washington State Building & Construction Trades Council, and local unions of the UFCW, SEIU, IBEW, IUOE, SMWIA, and AWPPW.

We strongly urge the governor and legislators to consider the significant advantages dependent benefits would have in helping families with children weather this crisis while injecting money into our community businesses. Given the federal incentives, it can be accomplished at a fraction of the cost of permanently lowering businesses' U.I. tax rates. Likewise, in the spirit of bipartisanship already demonstrated by Gov. Gregoire and by Senate Democrats, who adopted new rules allowing their colleagues across the aisle greater influence on budget amendments, we hope that Republicans and the business community can set aside past opposition to all benefit increases and embrace this alternative.

We need to make sure that our state's healthy U.I. Trust Fund is used to help employers AND the families who need it most. This balanced approach is well within our reach and will be strongly supported by our coalition.

New faces at the WSLC

Rick Bender and Al Link, the longtime President and Secretary-Treasurer of the Washington State Labor Council, have retired. Last fall, the unions that comprise the Council elected former WSLC staffer Jeff Johnson as President and AFT Washington leader Lynne Dodson as Secretary-Treasurer, and the two were sworn in as executive officers on Jan. 5.

In addition, the WSLC is proud to welcome Teresa Mosqueda (pictured) to the staff as our new Legislative and Policy Director. She joins the core WSLC lobbying team led by Government Affairs Director Rebecca Johnson that also includes Field Mobilization Director Lori Province. Prior to joining the WSLC, Mosqueda served as Health Care Reform Specialist for the Community Health Network of Washington, Legislative Relations Director and Health Policy Coordinator for the Children's Alliance, and as Legislative and Policy Coordinator for the Community and Family Health Division of the Washington State Department of Health.

Click here for more information about the WSLC officers and staff.

Mark your calendar for Thursday, Feb. 24

Leaders, staffers and rank-and-file members of all WSLC-affiliated unions are invited to the Washington State Labor Council's 2011 Legislative Conference from 8:30 a.m. to lunchtime on Thursday, Feb. 24 at the Olympia Red Lion Hotel. The registration fee, including materials, lunch and one admission to the reception, is $50. Details, including registration forms, will be posted soon on the WSLC website. As always, there will be a reception from 6:30 to 8:30 p.m. the preceding evening, Wednesday, Feb. 23, at the hotel with legislators and other state officials in attendance.

 

Questions about anything you've read in the WSLC Legislative Update? E-mail David Groves or call me at 206-281-8901. 

Copyright © 2011 -- Washington State Labor Council, AFL-CIO