Residents ask for an increase in state unemployment benefits during a rally at the Louisiana Capitol.
Louisiana lawmakers approved several bills Monday (Oct. 12) that would provide relief to businesses in light of the state’s unprecedented, pandemic-related unemployment rate, but mostly left behind proposals that would benefit unemployed workers.
The House Labor and Industrial Relations Committee rejected a bill that would have boosted the state’s unemployment benefits from a maximum of $247 to $347 per week. The Louisiana Association of Business and Industry — the state’s most influential business group — opposed the legislation.
“This is just not the time,” Jim Patterson, the organization’s vice president of governmental relations, told committee members.
Rep. Larry Frieman, who voted against the bill, said he was concerned the increase would accelerate the “burn rate” of the state’s unemployment insurance trust fund, which pays for unemployment benefits.
That trust fund has already run dry. Louisiana is borrowing money from the federal government in order to continue giving out the benefits.
Yet several lawmakers in both parties were willing to vote for multiple pieces of legislation that reduced the funding in the unemployment trust fund in other ways — ways that directly benefited employers. The Louisiana Association of Business and Industry pushed those measures.
House and Senate committees separately voted Monday for proposals to temporarily prevent businesses from having to pay higher taxes in order to replenish the depleted unemployment insurance trust fund. Their approval came on the heels of Gov. John Bel Edwards altering his COVID-19 executive order last month to do away with the same tax temporarily.
Louisiana hit the point where the “solvency tax” on businesses should have gone up automatically weeks ago. It’s triggered when the state unemployment trust fund dips below $100 million. In its current state, the trust fund is either very close to — or has actually run out of — all money.
Yet no one — not the Democratic Governor or the Republican legislative leaders — is interested in seeing businesses pay more into the unemployment fund during the COVID-19 crisis.
Senate President Page Cortez, R-Lafayette, and House Speaker Clay Schexnayder, R-Gonzales, sponsored the two pieces of legislation that would lift the solvency tax until August. The measures — and presumably the governor’s executive order — could cost the trust fund about $60 million in 2021, according to a fiscal analysis.
Cortez’s proposal is part of a larger legislative package in the Senate that would suspend some other financial assessments on employers and keep unemployed worker benefits from dropping.
In addition to higher business taxes, Louisiana is supposed to cut unemployment benefits — from a maximum of $247 per week to $221 per week — once the trust fund becomes depleted. That decrease is currently scheduled to take place in January, but Cortez’s package of bills would prevent a reduction in benefits until August.
So far, the House leadership has offered no legislation of its own that would keep unemployed workers benefits at their current rate for several more months. Instead, Schexnayder has doubled down on getting rid of the solvency tax.
Instead of just getting rid of the tax on a temporary basis, the House Speaker has proposed repealing it permanently. His bill to throw it out passed the House Labor and Industrial Relations Committee by a 13-1 vote with bipartisan support.
House members voting for the bill didn’t explain how they planned to refill the unemployment trust fund or pay back the federal government without the solvency tax. Louisiana Workforce Commission Secretary Ava Dejoie expressed concern that repealing the tax could end up costing the state more money in the long run.
“If the solvency tax isn’t there, you could be creating a greater debt by digging a bigger hole by borrowing more,” from the federal government, she told lawmakers.
But Cortez’s package of bills doesn’t offer a permanent solution either. If no other funding materializes to backfill the trust fund, business taxes would go up and unemployed worker benefits would go down as originally scheduled after August under his plan.
“None of these bills will solve the problem we are facing next year,” said Sen. Mike Reese, R-Leesville, who worked on the package with Cortez. “They give us an opportunity to pause.”
Edwards and several lawmakers have expressed an interest in seeking federal funding to backfill the trust fund. Louisiana is hardly the only state that’s run out of money to pay out unemployment benefits. The Associated Press reports that half of the states in the country are experiencing the same problem. So getting support from Congress isn’t out of the question.
Still, about a dozen out-of-work residents who traveled to the state Capitol Monday said they needed more relief. Since April, the state and federal unemployment benefits in Louisiana have dropped from a maximum to $847 per week to just $247 per week. People are having to choose between paying for food, housing or utilities, they said.
“I went from having two means of income to nothing,” said Cordelia Rogers, who worked at the Ernest N. Morial Convention Center and at the airport before losing her jobs to the pandemic.
“It’s not that we don’t want to work. It’s that we can’t work,” she said.
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