Compromise Reached On Unemployment Insurance Fund

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(Host) Governor Jim Douglas and Democratic leaders have reached a compromise that will erase a growing deficit in the state’s unemployment insurance fund.

The agreement calls for businesses to pay more, while workers will see a freeze in benefits.

VPR’s John Dillon reports:

(Dillon) Vermont has had to borrow $58 million from the federal government to pay unemployment claims during the recession.

The fund’s deficit was expected to balloon to $163 million by the end of next year – money that has to be paid back with interest. So the governor and legislative leaders made addressing the issue a top priority for this legislative session.

(Douglas) "It’s been a bipartisan effort with Democratic leaders and Republican leaders working hard on this, so thanks to everybody for a great job."

(Dillon) The governor announced the break-through at a celebratory news conference with Senate President Peter Shumlin and House Speaker Shap Smith. Shumlin was equally as effusive.

(Shumlin) "This is an example of how we get things done in Vermont. Other states are facing extraordinary deficits because they don’t have the courage to balance their budgets – we do. And other states are ignoring their UI problems because they don’t have the courage to fix it."

(Dillon) The compromise means businesses will pay more. It calls for a 60 percent increase in the base wage on which the unemployment tax is calculated.

Unemployed workers will also feel the pain in their wallet. The maximum weekly benefits will be frozen until the fund is solvent, expected in 2015. The proposal also calls for a one-week waiting period before a worker can collect, and reduced benefits for seasonal workers. House Speaker Shap Smith said all sides sacrificed in the negotiations.

(Smith) "I think we can be happy that we have a solution, but I don’t think anybody is going to be happy with the details of the solution. This is a difficult problem. It is 40 years in the making. We’re trying to solve it in six years, and in that context the decisions we have made are very difficult."

(Host) Christopher Curtis of Vermont Legal Aid – which represents low income Vermonters – was disappointed in the compromise. He said the cuts will come just as unemployed people are struggling to pay their bills.

(Curtis) "I think the benefit cuts do hit Vermont families pretty hard. These are pretty significant concessions to the administration."

(Dillon) But William Driscoll, who represents Associated Industries of Vermont, said the state’s business community feels like it gave more than it got in the negotiations.

(Driscoll) "The tax increases that are in this bill definitely push a little bit beyond what we thought could be tolerable. … To the extent that the reductions in benefit spending really don’t go as far or as long as we felt could have been done fairly and sustainably – it’s less balanced than what we had hoped."

(Dillon) The compromise bill still must be considered by both the House and Senate before the Legislature adjourns.

For VPR News, I’m John Dillon in Montpelier.

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