| State’s unemployment benefits account dipped dangerously low — commissioner |
By: John Brannon Messenger Staff Reporter
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Posted: Thursday, August 27, 2009 8:09 pm
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By JOHN BRANNON
Messenger Staff Reporter
Tennessee’s piggy bank that pays unemployment benefits dipped dangerously low during the latest economic downturn, according to a top official of Gov. Phil Bredesen’s cabinet.
How low is low? About 15,000 claims a week and a payout of $25 million a week, according to James G. Neeley, Tennessee commissioner of Labor and Workforce Development.
In its comfort zone, the “piggy bank” — officially known as the Unemployment Insurance Compensation Trust Fund — has a constant level of $500 million to $600 million. It fell far and fast.
Wednesday, Neeley addressed the issues. He was guest speaker at a luncheon held at the Obion County Industrial Training Center on South Second Street in Union City and attended by 30 local representatives of government and industry.
Neeley said the plunge in funds in the trust fund was shocking. Something had to be done, and soon. But what?
“If a trust fund gets down to zero, the state is forced to either put money in the coffer or borrow money,” Neeley said. “We did not want to borrow money from the feds.
“We resorted to legislation that would allow us to do some things.”
A bill to that effect was filed in the General Assembly this spring. Styled as House Bill 2324 and Senate Bill 2315, the legislation gained immediate favor in the Senate but only lukewarm reception in the House.
“They dragged their feet about six weeks, with no action taken,” he said.
Then came the South Carolina experience. It proved an excellent object lesson for Tennessee legislators.
“The governor of South Carolina announced his state would not accept federal (stimulus) money. Three days later the feds told him they’d take over his (unemployment benefits) program,” Neeley said. “We certainly didn’t want the federal government running our program.”
With that in mind, lawmakers in the Tennessee House had a change of heart and endorsed the proposed legislation; in May the bill passed both the House and Senate and was signed into law by Bredesen and is now in effect.
What it does
According to a press release, the legislation increases Tennes-see’s taxable wage base from its current $7,000 limit to $9,000. The change is effective Jan. 1, 2009, meaning all wages paid in the current year are subject to the $9,000 taxable wage base.
“Our agency will be relying on you, the employer, to inform us of the taxable portion of your employees’ wages,” Neeley said. “We ask that you report any additional taxable wages ...
“In addition, the legislation provides for a temporary additional fee of six-tenths percent on all unemployment insurance premium rates ... This provision is likewise effective Jan. 1, 2009. ...
“It is now our task to administer and enforce the provisions of the legislation, and I pledge to you that we will do so in as efficient and equitable a manner as possible.”
Explanation
“If we had not done anything, it would have cost us 10 times more than what it’s going to cost us,” Neeley said. “We were having a deficit of over $300 million, and we’d have to pay interest on that $300 million, plus some more because it (the fund) had gotten so low. With that legislation we were able to do some things.
“The whole issue was that we had to do something.”
And where does the fund and the claims situation stand now?
Neeley said the number of unemployment claims has decreased to about 3,500 a week and the trust fund has “grown” to $326 million.
“I am optimistic that what we did (get the bill passed) will keep the fund from going back down to where it was, and it’ll keep us from having to pass more legislation or borrow money from the federal government,” Neeley said.
Outlook
Neeley said he believes the overall economy is “getting better.”
“It is improving. But it’s not going to happen overnight,” he said. “It’s going to be slow coming back.”
Published in The Messenger 8.27.09 |
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