Top jobless rate payers could pay less

· by Herb Dew

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The following is an article by The Greenville News on Wednesday, April 13, 2011

Top jobless rate payers could pay less
Critics say plan favored by panel would hurt those with lower rates

By Tim Smith
STAFF WRITER

tcsmith@greenvilleonline.com

COLUMBIA— The majority of a House unemployment insurance subcommittee supports a plan to lower rates by 32 percent for the top-paying categories, a proposal opposed by the South CarolinaChamberof Commerce and the chairman of the Senate Labor, Commerce and Industry Committee because they believe it would unfairly shift costs to businesses paying the lower rates.

The House panel, however, decided Tuesday to wait two weeks to vote on the measure to try and build a consensus in the House.

House Majority Leader Kenny Bingham, who is chairing the panel, told members he wants addi-tional time to build support for a House plan, especially with potential “bottlenecks” in the Senate and the Governor’s Office.

Bingham said Gov. Nikki Haley has said she will veto any bill that requires her to borrow more unemployment funds from the federal government, something lawmakers said would have to happen under the plan favored by most members of the subcommittee.

The state has already borrowed about $900 million for unemployment needs since 2008, when its unemployment trust fund became insolvent.

Sen. Greg Ryberg, chairman of the Senate LCI Committee, has said he is opposed to any plan that would shift costs from the highest rate categories to the lowest rate categories. His committee has sent a bill to the floor without any major relief plan, but senators say they plan to amend it.

“With all due respect to the governor and Sen. Ryberg, I’m not here to dance to their music,” said Rep.

Gilda Cobb-Hunter, an Orangeburg Democrat and a member of the panel. “I’m ready to move and let the chips fall where they may.”

A spokesman for Haley said the governor wants to find a solution.

“The governor does not support borrowing any more dollars from the federal government,” spokesman Rob Godfrey told GreevilleOnline.com. “She is, however, working with Sen. Ryberg, and others, to find a way to give South Carolina businesses relief without putting us in further debt to the feds.”

Rep. Harry Ott, leader of House Democrats and another member of the panel, said he thinks “it’s important to send a message out there” that the House wants to grant relief.

Lawmakers are responding to pleas from business leaders to grant some relief by the end of the month because the year’s first unemployment insurance bills are due April 30.

Many businesses, especially in the staffing and manufacturing sectors, are facing rate increases of between 300 and 600 percent.

Under the new system, rates range from $10 per worker to $1,110 per worker, depending on a business’s experience with layoffs.

Freddy Campbell, chief financial officer for AVMin Marion County, told the committee that his company is facing a rate increase of 264 percent this year and $1 million more in insurance payments over the next five years.

“We don’t have an extra $1 million to give you,” he said. “I think we’re going to need more relief than you have on the table.”

The plan now being considered by the panel would stop federal loan payments in 2011 and 2012, using the savings to lower rates to the highest categories by 32 percent. Because stopping the loan payments would in effect trigger an increase in federal taxes for all businesses, the plan also would compensate the lowest 12 categories.

But according to the Department of Employment and Workforce, the plan would also shift almost $112 million in costs to the lowest rate categories, something that has drawn the opposition from the state Chamber and Ryberg.

Darrell Scott, who represents the Chamber before lawmakers, told the panel the organization supports relief for businesses in the highest rate categories but opposes any plan that would shift costs to the lowest rate group.

That response drew the ire of Ott.

“I just find it disturbing that the Chamber of Commerce would stand here and saywedon’t have a better plan, but we don’t like this one,” he said.

House Ways and Means Committee Chairman Dan Cooper and others also complained that the Chamber hadn’t shared the organization’s position before Tuesday.

The state’s chapter of the National Federation of Independent Businesses takes the same position as the Chamber on unemployment insurance rates, a representative told the panel.

However, representatives of the staffing and manufacturing industries said they support the plan discussed Tuesday.

Lewis Gossett, president and CEO of the South Carolina Manufacturers Alliance, said he doesn’t believe the plan shifts costs.

“I don’t agree with that at all,” he said. “Their bottom line costs will not go up at all.”

The panel agreed the House bill should include legislation to allow businesses with positive trust fund accounts to be placed no higher than the12th rate category.

The legislation also should include provisions, the panel decided, for seasonal labor restrictions on unemployment and to extend the time requirement for eligibility to help staffing companies, who argue they shouldn’t have to be held responsible for workers they pull off of unemployment for temporary jobs that only last several months.

Details on those ideas must still be worked on.

“That’s a serious problem,” said Henry Harrison of Greenville, chairman and founder of American Services Inc. “Staffing companies should be treated differently.”