Montpelier, Vt. – January 4, 2010 – Rep. Peter Welch unveiled legislation today aimed at helping Vermont businesses, workers and taxpayers confront the growing fiscal crisis caused by the depletion of the state’s Unemployment Insurance (UI) trust fund.
Welch was joined at the press conference by Vermont House Speaker Shap Smith, Vermont Department of Labor Commissioner Patricia Moulton Powden, Vermont Chamber of Commerce President Betsy Bishop, Lake Champlain Regional Chamber of Commerce President Tom Torti and Vermont AFL-CIO Political Director Dennis LaBounty.
Welch introduced a new bill, H.R. 4282, which would extend for two years an American Recovery and Reinvestment Act (ARRA) provision allowing states to avoid paying interest on loans to cover shortfalls in their UI trust funds.
Welch said, “The people who are out of work are out of work for the longest period of time since the Depression. The duration is longer now than it was even in 1982, so you literally have to go back to the Great Depression in this country to find a period who are out of work for as long as they’ve been out of work.” He said,”By extending the delay in interest accrual, Vermont businesses, workers and taxpayers will be spared an additional burden during tough economic times.”
“The Governor, the Legislature, understand they’ve got to work together to do everything possible to mitigate the harm and to get jobs going,” he added.
The state of Vermont is expected to begin taking out loans in early 2010 to cover the shortfall in its UI trust fund and, if it does not take action, it may have to borrow as much as $350 million over the next ten years. Because interest cannot be repaid from UI trust revenues, the state will have to finance interest payments with new taxes or additional budget cuts.
Lake Champlain Regional Chamber of Commerce Tom Torti illustrated what the impact of extending the ARRA provision for two more years would mean to Vermont. Torti said he had asked two businesses in the same sector: one larger, one smaller, about what it meant to them. He described the exchange saying for the smaller business, after other cost-saving measures it had already enacted, this move would mean saving the job of one person. For the larger, he said, it meant breathing room. They would have to make some staff adjustments. They couldn’t just absorb the estimated $300,000. But said Torti, “What bothered them more than that, it wasn’t about their profit, it wasn’t about how much money they were going to have to spend, what bothered them was that they were going to have to lay off Vermonters. They were going to lay off hard-working Vermonters who contribute to this economy in order to pay unemployment. So they’re putting people on unemployment in order to pay unemployment tax.”
Welch spoke of a couple ways to pay for the cost of the waiver. First, he was in favor of tapping unallocated stimulus funds. A second source, he said, “Wall Street bankers have done really well with the bailout, and frankly, I feel that its time for them to helps us out, if we have to tax some of those bonuses, let’s do it. If we’ve got those Wall Street bonuses out there, that are essentially made possible because of American taxpayers, the American workers, then I’d like to see those folks step up and help out Main Street.”
When it was signed into law last February, the ARRA delayed interest accrual for state UI trust loans through Dec. 31, 2010. The bill would extend that provision until Dec. 31, 2012, potentially saving the state $20 million, says Welch.