UI BILL TOUGH MEDICINE FOR SICK SYSTEM

February 14, 2008

Wisconsin’s Unemployment Insurance system is ailing.  SB 431 & AB 757 may restore the system’s health.  It is tough but necessary medicine that will raise taxes on every Wisconsin employer.  It has to be done.  Wisconsin Independent Businesses supports the bill. 

“WIB asked that the tax increase be phased in and we requested that employers whose workers drain the system be held more responsible than stable employers.  SB 431 & AB 757 deliver on both of those issues,” said Wayne Corey, WIB executive director.  “We want to give special thanks to Representative Mark Honadel for his leadership in providing this protection for Wisconsin’s most stable employers,” Corey added.  Representative Honadel (R-South Milwaukee) chairs the Assembly Committee on Labor & Industry and has paid close attention to the development of this session’s “agreed upon” bill, receiving its legislative hearing today. 

The new taxes are phased in with increases in 2009, 2011 & 2013.  The phase-in allows the state’s small employers to prepare their businesses to absorb the tax increase.  Meanwhile, employers with a negative balance in their account – meaning their workers have drawn more in UI benefits than the business has paid in UI taxes – will have a greater portion of their UI tax paid toward the UI fund’s “balancing account,” the portion of the fund that has had a seriously negative balance in recent years. 

The Unemployment Insurance Fund must be fixed.  It is essential for workers and employers alike that a scenario akin to the disaster of 1983 be avoided.  After many years of strong balances, created through adequate employer taxes and a modest annual benefit drain on the UI fund, the overall fund balance has declined significantly in recent years.   

WIB remembers too well the fund’s insolvency nearly a quarter-of-a-century ago.  That insolvency led to massive borrowing from the federal government and years of the highest UI tax rates in state history.  As the national economy slumps, WIB remains anxious to avoid a repeat of 1983’s devastating episode. 

WIB is supporting SB 431 & AB 757 in the hope that this legislation will adequately address the problems the UI fund is facing.  We don’t enjoy tax increases on stable employers and we hope the 2008 legislation resolves the current problems far into the future.  We hope the legislature will pay close attention to this difficult issue in coming years. The well-being of state businesses and workers will depend on it.