STATEHOUSE - In the past year, we have seen unemployment rates rise to extreme highs. Currently, more than 300,000 Indiana residents are unemployed. Combine that with a projected $1.7 billion deficit to the Unemployment Insurance Trust Fund by the end of the year and a $2.5 billion deficit by 2010. The fund provides out-of-work Hoosiers with their unemployment compensation.
During the 2009 sessions, the legislature created the Unemployment Insurance Oversight Committee. I was one of three House members appointed to the committee and I take this position seriously. I also know Hoosiers deserve better than to see our fund continue to draw a bigger and bigger deficit. We cannot continue to count on the federal government to loan us money.
The committee has met several times, working toward a solution to the deficit. On Sept. 29, we reviewed states with a deficit, as well as states with a surplus. These comparisons helped us gain a better understanding of the situation facing Indiana. Our committee is dedicated to finding a solution to the deficit. We are meeting again on Oct. 26 to continue working towards an answer.
How We Got Here
Almost 10 years ago, the legislature passed a bill that lowered employer tax rates and raised unemployment benefits. At that time, the state had a $1.6 billion surplus in the fund. Over the years, more money was being spent in benefits than was being received in taxes, leading to deficit spending.
In 2008, Indiana was forced to borrow money from the federal government to cover the fund's negative balance. Indiana, like numerous other states, is still borrowing money from the federal government. Loans for the fund will have to be paid back.
What's Happening Now
During last year's regular session, the General Assembly passed House Enrolled Act 1379, which raised taxes on employers in an effort to reduce the deficit. I, along with my House Republican colleagues, did not support this legislation.
The bill also contained two provisions, a compliance center and voluntary buy-downs, aimed at saving the fund money. However, both provisions are currently being examined by the U.S. Department of Labor for possibly violating federal regulations.
The compliance center is responsible for handling discrepancies between employers and employees. The U.S. Department of Labor is scrutinizing its fact-finding process during disputes. The voluntary buy-downs allow employers who use the fund most often the ability to enter a lower tax bracket by paying an additional fee. This, too, is being reviewed by the U.S. Department of Labor because it does not treat all employers equally.
I did not support this bill because it did not fully address all the issues involved in the deficit. The winning solution must cover everything from taxes to eligibility to benefits. It cannot be just one or two of these issues. It must be all three.
We Are Not Alone
Indiana finds itself as one of 21 states with an unemployment fund deficit. It is projected that the number of states will almost double by the end of next year.
Among the states facing a deficit are Illinois, Michigan, Ohio, Kentucky, California, New York and North Carolina. Today, the U.S. combines for a $16.7 billion dollar deficit to unemployment benefits funds. Projections indicate a $90 billion deficit by 2012.
What's Next
I will continue meeting with businesses and workers because the problem is obviously not going away. Our committee has an obligation to recommend solutions to fix the deficit, and I will continue doing everything I can to get this issue resolved. I am committed to getting Indiana back in the black while ensuring that out of work Hoosiers receive the benefits they deserve.
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