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Businesses back Kehoe plan to repay unemployment loan

Businesses back Kehoe plan to repay unemployment loan

April 10th, 2013 in News

Last summer, Jefferson City McDonald's owner Steve Ruprecht got a bill for "an interest payment on unemployment of $2,500," he told the state Senate's Small Business, Insurance and Industry Committee Tuesday afternoon.

This past January, he said, "We got (another) assessment of $11,800. There's operators in Columbia that, I know, got assessments of over $23,000.

"And this is going to double this year, under the current plan. Mine will go up to $23,000 or $24,000, and his (in Columbia) will go up to $40,000 or $45,000."

Employers contribute to the unemployment fund, so - when an employee loses a job and qualifies for the payments - benefits are available for a period of time.

But, if a state has more unemployment claims than it can afford, it can borrow money from the federal government.

"Our fund was like most other states," state Sen. Mike Kehoe, R-Jefferson City, told the committee. "Everything was in good shape (until) somewhere around '08 or '09, when the economy hit the skids, unemployment claims went through the roof."

As of Feb. 14, Kehoe said, Missouri owed the federal government nearly $595 million for those loans - and expects to pay back $210 million of that next month.

To make the payments, Missouri businesses are paying even more into the fund than normal.

"The assessment is $42 per head, for each employee, this year," said Brendan Cosette with the Missouri Chamber of Commerce and Industry. "Next year, it jumps to $63. And, if we don't take care of this and pass Sen. Kehoe's bill, it will jump to $84 per employee, for all businesses in the state of Missouri.

"That's a 300 percent tax increase, basically."

Kehoe wants lawmakers to pass a bill that would cut in half the unemployment benefits Missouri would pay later this year.

"Right now, when somebody files for unemployment, they get, basically, 20 weeks of state (benefits) and 20 weeks of federal, or 40 weeks total," Kehoe explained. "This bill, for the months from July-December 2013, would bring that down to 20 weeks total," and use the money to pay down the federal loan amount.

He estimates the shift in benefits payments could reduce the federal loan by more than $88,760,000.

And adopting his plan would have the debt paid off and give the unemployment fund a surplus by the end of 2014, he said, saving "the employers an additional assessment in the 2014 and 2015 years of $236 million."

Kehoe added: "It's becoming very expensive on Missouri employers to help repay these funds."

But, opponents said, the plan doesn't help Missouri workers.

Mike Lewis, secretary-treasurer of the Missouri AFL-CIO, told the lawmakers: "At a time when Missourians need help most from the government, I don't think it's a time to turn your back on them."

Annette Driver, lobbying for the Missouri Association of Social Welfare, added: "Roughly $185 million would be held from our state's economy for the second half of 2013, if this bill is enacted.

"Unemployed workers need this additional time while they are seeking employment, to be able to support their families (and) pay their bills."

She said passing the bill and cutting unemployment benefits for six months "would have an adverse effect on retail grocers, landlords, utility companies" and others.

The committee took no action on Kehoe's bill Tuesday.