Lawmakers Look To Soften Irene’s Financial Blow

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Job losses in the wake of Tropical Storm Irene were in many cases temporary, lasting only as long as it took businesses to repair damage from the flood.

The financial impact of those layoffs has been more lasting, but lawmakers may have found a way to soften the blow.

When it comes to calculating the cost of unemployment insurance, businesses can count on one cardinal rule: The more people you lay off, the more you’re going to pay. And that’s turning into a real problem for companies that fell in the path of Irene, many of which had to temporarily send workers to the unemployment lines.

"When we were mucking out businesses after the flood, I don’t think anybody was thinking about what this was going to do to their unemployment experience ratings," said Rep. Alison Clarkson, a Woodstock Democrat.

An "experience rating" reflects an employer’s track record with layoffs. Companies whose employees began to claim unemployment benefits immediately after Irene only recently began to see the effect on their rates.

Clarkson said some businesses in her district have seen fourfold increases in what had already been a significant part of their payroll expenses. She introduced legislation this year to scrub from employers’ ratings any post-Irene layoffs that could be attributed directly to the flooding.

Tuesday, the House gave preliminary approval to a modified bill that would provide credits to employers that have seen their unemployment rates increase as a result of Irene.

The legislation would also apply to two other federally declared flooding disasters that occurred earlier in 2011 – one on Lake Champlain, and another in Barre, Berlin and Montpelier. The legislation would insulate employers only from the first eight weeks of Irene-related layoffs.

No one knows yet exactly how many businesses have suffered Irene-related bumps in unemployment insurance rates. But Labor Commissioner Annie Noonan said that without the bill, businesses affected by Irene, and other eligible disasters in 2011, could collectively see their unemployment expenses rise by as much as $8 million.

Noonan said Vermont has to balance the financial needs of businesses still recovering from Irene with the consequences of failing to pay off an outstanding debt taken out by the state when its unemployment trust fund ran out of money at the height of the recession.

If Vermont doesn’t pay off its debt to the federal government by November, then all businesses in the state will see a penalty levied against them.

"Ultimately the goals are not to tip the apple cart over on repayment of the loan, or putting off the recovery of our (unemployment trust fund)," Noonan said Tuesday. "We want to do what we can do for businesses within the constraints of what the fund can absorb without causing a mess."

Noonan said she thinks the plan passed by the House has found that balance. But reaching out to businesses is no small task. Lawmakers have appropriated $60,000 for postage and mailings to every business in the 12 counties that came under federal disaster declarations in 2011 and for the additional staff time that will be involved in handling claims.

Rep. Bob Bouchard, a Colchester Republican, said that while the plan will offer some relief, it won’t entirely solve the problems being faced by businesses that were surprised in March with higher-than-expected quarterly unemployment insurance bills.

While those businesses will receive credits on future unemployment payments if the legislation passes, Bouchard said, they still have to pay the full freight now.

"We know that a lot of businesses are going to have to borrow money to make this payment," he said.

If the legislation makes it into law this year, businesses may be spared similar fallout in the future. The bill passed by the House would direct the Department of Labor to hold harmless a company’s experience rating from any layoffs related to events that earn federal disaster declarations.

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