State's Unemployment Debt May Mean Higher Unemployment Taxes On Businesses

Wisconsin has been borrowing money to pay unemployment benefits, and the debt is now at $1.18 billion.

The debt now means is ranked 11th among the 27 states that owe money to the federal government. Businesses may also have to pay higher unemployment taxes, according to a _study_ by the Tax Foundation.

"Unemployment insurance was meant to be a program that built up surpluses in prosperous times, with the expectation that they would be spent down during economic downturns," said Joseph Henchman, vice president of legal and state Projects Tax Foundation.

According to a story titled _Wisconsin owes U.S. $1.18 billion on unemployment borrowing_ by Don Walker, of the Milwaukee Journal Sentinel, state lawmakers are trying to reduce the debt with these measures:

• Special assessments against businesses to pay the interest the federal government is charging states.
•  A one-week waiting period for people seeking unemployment benefits.
•  An increase in the taxable wage base the state uses to calculate what companies owe.
•  A requirement that residents filing new claims register first with the Wisconsin Job Service and actively search for work.
•  Proposed legislation that sharply increases the penalty for fraud.

Craig Barkelar, administrator of the Department of Workforce Development's division of unemployment insurance, told Don Walker last week "that Wisconsin has paid $42.4 million in interest payments owed between Jan. 1 and Sept. 30 to the federal government. The state did so, he said, to avoid losing administrative reimbursement costs that the federal government pays Wisconsin."

The reduction efforts were part of a law passed in August that also extended benefits for 40,000 workers for 13 weeks. At that time, __said the extension was a need for his constituents.

“Racine has historically ranked first or second in unemployment, so my constituents know how difficult it can be to find work,” said Wanggaard in a written statement. “People are out there actively looking for employment and learning new skills to re-enter the workforce. This legislation provides a 13-week lifeline to help these people get back on their feet.”

Senate Bill 147 was authored by State Senator Van Wanggaard (R-Racine) and followed the recommendation by the Unemployment Insurance Advisory Council. The issue hit the Senate floor on July 25 and after Senate Democrats added an amendment removing the one-week waiting period, a bi-partisan vote passed it on the Assembly.

But at that time, Representative Cory Mason (D-Racine) said state Republicans shouldn't be so quick to pat themselves on the back since the one-week waiting period could put more families at risk.

"It’s great that Republicans have finally seen fit to respond to Democratic efforts to accept federal money for our state’s unemployed workers. But Republicans continue their attack on the middle class by denying tens of thousands of workers unemployment benefits when they may need it most: in the first week of unemployment," he said in an email to Patch.