Indiana Democrats and Republicans still far apart on unemployment insurance tax

INDIANAPOLIS | Democrats rejected a Republican compromise on unemployment insurance Monday, saying the proposal wouldn't benefit workers and doesn't fix the administration of Indiana's unemployment system.

Meeting in a House-Senate conference committee, state Sen. Brandt Hershman, R-Wheatfield, presented two compromise offers. The first mirrored Senate Bill 23 as approved by the Senate, delaying a scheduled increase in employer-paid unemployment insurance premiums for one year. The other implemented a two-year delay, but also included 13 job-creation proposals favored by House Democrats.

"This represents our best compilation of a variety of topics and issues that have been brought forth," Hershman said.

But it wasn't good enough for state Rep. David Niezgodski, D-South Bend.

"There's much more that we are still calling for," Niezgodski said.

Niezgodski rejected the first compromise proposal, because it didn't include any of the House changes made to Senate Bill 23. The second, he said, needed to include more of the House proposals, including punishments for companies that misclassify regular employees as independent contractors to avoid paying taxes and unemployment premiums.

Hoosier businesses are scheduled to pay $400 million in higher unemployment premiums in May to begin reducing Indiana's unemployment debt to the federal government and to make the state unemployment fund solvent. Many lawmakers are concerned that if companies have to pay the extra money it will lead to worker layoffs.

The Republican-controlled Senate approved a one-year delay in the higher rates, while the Democratic-controlled House voted for a permanent repeal. Republican Gov. Mitch Daniels signed the higher rates into law in 2009.

Niezgodski said he believes businesses that don't have to pay the higher unemployment premiums may not use the money they save effectively.

"Giving this delay of taxes to businesses throughout the state is not going to do anything for the 300,000 unemployed Hoosiers," Niezgodski said.

State Sen. Karen Tallian, D-Ogden Dunes, said she would like the legislation to also include new rules for how the state runs the unemployment program.

"You would expect that the conference committee report put out by the Senate Republicans is going to shield the administration's workforce development department," Tallian said. "But I'm still looking at those things."

Both sides plan to continue negotiations, hoping to reach a settlement before the General Assembly must adjourn on Sunday.