INDIANAPOLIS — Republican policymakers say Indiana can't wait to see whether Congress will give the state more time before it has to start paying back the $2 billion it borrowed to bolster Indiana's bankrupt unemployment insurance fund.
Therefore, state lawmakers are pushing ahead with their plan to cut jobless benefits as part of an effort to restore balance to the fund that has paid out more than it took in since the recession started.
The state Senate Tax and Fiscal Policy Committee approved that plan on an 8-4 party-line vote Thursday evening, with all Republicans voting yes and all Democrats voting no.
Since it already has cleared the House, the plan is only a couple of steps — full Senate approval, and then conference committee to iron out the two chambers' minor differences — from reaching Gov. Mitch Daniels' desk.
And, Daniels said Thursday, he is eager to sign it.
"I'm very pleased with what the General Assembly is doing. They've got a very good compromise program, and it's real. I know it's real. And it will address our problems. So we ought to just move straight ahead with it," he said.
The Republicans' proposal would still increase taxes on businesses, but not by as much as those taxes are set to increase this year if they don't act.
That's because two years ago, Democrats held a House majority. So when legislators hammered out a plan to replenish the unemployment insurance fund, Democrats had the power to keep any benefits cuts from being included.
Now, though, Republicans say they intend to lower the average $283 weekly benefit. It would drop to about $220 per week, according to Rep. Dan Leonard, R-Huntington, the author of House Bill 1450, which contains the plan.
At the heart of the disagreement between opponents of the new plan and its supporters is whether dollars paid out for unemployment benefits are a more useful economic stimulus in the pockets of out-of-work Hoosiers or businesses that could hire them.
Sen. Karen Tallian, D-Portage, said the proposed benefit cuts — an average of 25 percent — "might mean you're eating macaroni and not paying a water bill for the next 10 years."
She said dollars paid out in benefit payments circulate quickly through businesses such as grocery stores and gas stations in the communities of their recipients, which stimulates the local economy.
Leonard disagreed.
"I do not believe in any fashion that unemployment benefits are a stimulus to the economy," Leonard said.
Under the GOP plan, businesses would still face hundreds of millions of dollars in new taxes each year, Leonard said, as well a 13 percent surcharge to help Indiana pay interest on the federal loan.
This year, the federal government also is set to start clawing back its loans by increasing employers taxes by $21 per worker per year. That's about $80 million total statewide.
The Obama administration, meanwhile, wants to give states two more years before those new fees hit.
Obama's plan would ultimately cause businesses some pain. It would increase the taxable wage base — the amount of an employee's income that is subjected to a percentage-based fee for unemployment insurance — from $7,000 to $15,000, starting in 2014.
"It's another one of those short-term goodies, long-term costs. I don't think it's very attractive," Daniels said.
Some Republicans on the Senate panel also said that might be a worse deal than their proposal to focus most of the burden of the tax increase on businesses that frequently lay off workers.
"The quicker we pay this off, the better for the employer who is not abusing the system or laying people off," said Sen. Phil Boots, R-Crawfordsville.
And, Daniels said, Obama's plan is unlikely to pass, because Republicans now control the U.S. House.