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Local lawmakers weigh in on governor's proposal
Tuesday, March 31, 2009
By KIM BARTO AND AMANDA BUCK - Bulletin Staff Writers
Three of four area legislators said they agree with Gov. Tim Kaine's proposed changes to the state's unemployment laws.
Virginia must make two changes to its unemployment compensation laws to receive $125 million in federal stimulus money, choosing from four available options.
The changes would extend benefits for part-time work and "double the period for receiving benefits for people who lost jobs in declining industries and are making progress in job retraining programs," The Associated Press reported.
Though some business interests oppose the changes because they would increase costs to employers, Del. Danny Marshall said they are necessary because the state needs the stimulus money.
"From what I've seen (of Kaine's proposal), I don't have a problem with it," said Marshall, R-Danville. "To me, it looks like we don't have a choice."�
Marshall serves on the Commerce and Labor Committee. According to a report presented to the committee in mid-January, he said, Virginia is projected to run out of money in the fall if the state does not receive stimulus funds.
"This has never happened in the history of the state of Virginia," Marshall said. "Given that, if we don't have the stimulus money, employers are going to pay more money anyway."�
The problem is that, with the rising number of people out of work, there are fewer people contributing to the unemployment pool, he said.
"When you are employed, your employer pays so much money into this pool," Marshall said, likening unemployment funds to a savings account "that keeps building up in good years."�
"The state of Virginia has always had a low rate on the insurance because statewide, we've had a low unemployment rate," he said. "Up until this year, we always had way more surplus than we needed."�
However, he said, "We've never had a hit like this."�
With or without the stimulus, Marshall said, "the tax on unemployment is going to go up. We've got to have that money in there to meet our obligations."�
Marshall noted also that there is a time limit to the unemployment changes tied to the stimulus.
"When the federal money stops coming, the benefits to employees go away," he said.
Del. Ward Armstrong, D-Collinsville, said he favored the changes.
"It's helpful for us," Armstrong said, noting the recent spike in the area's unemployment rate. "Certainly it helps people keep making car payments and house payments, and this helps the community as well, so I'm for it."�
Adopting the changes also is important because "it allows us to draw down over a hundred million dollars worth of stimulus money," Armstrong said.
Sen. Roscoe Reynolds, D-Ridgeway, said the governor's proposal "makes mighty good sense, considering the economic uncertainties facing the nation today."�
Reynolds said arguments that the costs to businesses would be too high don't add up.
Virginia often is ranked the best state in which to do business, he said, and "these proposals, if adopted, will not have an adverse effect on that, and certainly will provide some relief and help in areas of high unemployment, and make it possible for some individuals to upgrade their work skills."�
Reynolds noted that the state's unemployment insurance rates are well below the national averages and those of neighboring states.
Nevertheless, he said he "would not be surprised" if winning passage in the General Assembly proves difficult.
"I would be a little bit disappointed if it becomes a matter of a great deal of conflict," he said. "It seems to me that the argument in favor of adopting this proposal is very, very sound.
"... this is a method of helping people who are hurting who have not been directly benefited by the other methods of trying to overcome this recession," he added, referring to government assistance for the banking and automotive industries.
Del. Donald Merricks, R-Pittsylvania County, said he has not made a final decision on the proposal because he has not had "a lot of time to research and analyze what Governor Kaine is proposing."�
However, Merricks said, "We need to be very careful about it."�
Merricks said he is concerned about raising employer costs and "would be highly reluctant to add any more burden to small businesses."�
"I think people need to understand who hires people: It's businesses. In 70 percent of cases, it's small businesses," he said. Raising the unemployment insurance rates "would be biting the hand that feeds you," he added.
Another concern is if there are "a lot of strings attached" to the stimulus money, Merricks said, "it really throws us way off-course. Someone would have to do a really good job convincing me otherwise."�
Also, he said, "the federal government shouldn't be dictating to the state as to what we should or should not do."�
Merricks raised the question of, What happens once the federal money stops funding the programs after two years?
"The government is offering this $125 million if we do this, and that's great, but what happens at the end of those two years? Is the state supposed to step up?" Merricks said.
"Especially since it's going to dry up in two years, you're left with really hard decisions. We have to think, are we going to continue this?" he said.