November 24, 2014

Chamber says legislative solutions to be sought in 2014 for unemployment insurance debt

Missouri is one of 14 states in which employers will be paying more next year for unemployment insurance, and the Missouri Chamber says that increase will add up.

The Missouri State Capitol (Photo courtesy:  Missouri House Communications.)

The Missouri State Capitol (Photo courtesy: Missouri House Communications.)

Missouri borrowed federal dollars in 2008 to pay unemployment benefits the state couldn’t cover. That debt hasn’t been paid, and so the state’s employers are losing tax credits that counted toward what they pay for unemployment insurance. That translates to an increase in what employers pay per employee from $42 to $63.

Missouri Chamber Director of Legislative Affairs Brendan Cossette says that only sounds like it’s not a lot.

“When you look at the total amount that is coming for all employers throughout the state or for large employeers … those are real dollars. That’s a significant amount of money and it’s certainly something that all of the accountants and CPAs throughout the business world have taken notice of.”

Missouri owes $308-million to the federal government in unemployment insurance debt. Cossette says until that is paid off, the unemployment insurance rate will continue to increase. He projects it will reawch $84 per employee in 2015.

One way the Chamber and some lawmakers have sought to pay the debt down faster is through legislation. Cossette says HB 611 in this year’s legislative session was one such attempt but it was vetoed and the House could not get the votes to override that veto.

“(Legislators) were hoping to remedy the situation, at least partially,” Cossette explains, “by changing the defenition of ‘misconduct,’ which in turn would reduce the amount of people that are getting unemployment benefits if they had been discharged because of misconduct, and the fewer people that get benefits, the more likely this is going to be paid off quicker.”

Cossette cites an example of a person being let go from work for failing a drug test but still getting unemployment benefits.

“Every time that happens,” says Cossette, “that’s fewer dollars that are in the trust fund that can either go to repay this or go to pay for those who have legitimate claims.”

Cossette says another possible solution has been used in other states, and it involves bonding.

“Basically the employers have used the state as a mechanism to bond to pay off that debt in one fell swoop, and then to pay for the bond has been an assessment on employers but it’s less than what they owe on the surcharge.”

Cossette expects to see both the bonding concept and language similar to that of HB 611 pursued in the 2014 legislative session.