Kokomo — With the state of Indiana expected to owe the federal government $80 million in interest payments alone this year, it’s no surprise Indiana lawmakers are moving to pay off a $2 billion debt for unemployment benefits.
Tuesday’s party-line vote in the Indiana House pushed a plan to repay the debt over the next 10 years to the Indiana Senate, where it stands a good chance of passage.
Whether the Republican-dominated Senate approves the bill’s tax increases on business might be the biggest remaining question.
State Rep. Mike Karickhoff, R-Kokomo, said the bill would pay off the state’s unemployment fund debt by splitting the burden between increased business taxes and reduced benefits for the unemployed.
“It will be about 50/50,” Karickhoff said, when asked what proportion of the debt would be borne by business, and by decreased benefits.
Businesses that rarely use the unemployment insurance might even see a decrease in premiums under the legislation, while businesses that frequently use the fund will see the largest increases, he added.
Several provisions affecting workers might be especially felt in Kokomo.
Workers who take a lump-sum buyout and voluntarily leave a job would no longer be allowed to receive benefits. And workers placed on a seasonal furlough, such as when a plant retools, also won’t be able to get benefits.
The biggest change for laid-off workers, however, would be the bill’s schedule for scaling back benefits the longer someone stays on unemployment.
Unemployment benefits may be received for 99 weeks — almost two years.
But the bill would begin scaling back benefits after the first year, with benefits decreasing each quarter until they would be completely phased out by the end of the 99 weeks, Karickhoff explained.
With unemployment close to double digits since the recession hit full force in 2009, Indiana has racked up one of the largest unemployment insurance fund debts in the nation.
Legislators had planned to phase in a series of tax increases on business last year, but postponed the planned increases because of the recession.
Labor unions heavily opposed the proposed benefits cuts in the runup to Tuesday’s vote, saying the cuts would unfairly hurt Hoosiers already facing poverty.
The bill’s sponsor, Rep. Dan Leonard, R-Huntington, called it a “balanced approach.”
All of the Kokomo area’s House representatives voted in favor of the bill.
Under the bill, the maximum weekly benefit would remain $390.