Legislation to boost state jobless benefits for the first time in 17 years cleared a crucial hurdle Tuesday.
But the language approved by the House Appropriations Committee actually could end up shorting residents of some rural counties.
SB 1411, which now goes to the full House, would boost the maximum payments to $320 a week. That’s $80 more than the current figure which has not been altered since 2004.
It actually could go as high as $400 a week.
That, however, is dependent on getting the employer-financed trust fund that provide the benefits up to a point where the federal government considers it healthy enough to let the state borrow money without paying interest. And no one has any idea if and when that might happen.
But to make the numbers work — and to get the blessing of business interests — Senate President Karen Fann had to include a provision that would curtail the number of weeks someone is eligible.
Currently, the maximum is 26 weeks, though there have been extensions financed with federal dollars. Under the proposal by the Prescott Republican, that would drop to 22 weeks any time the statewide unemployment rate for the prior quarter drops below 6%. And it would go to 20 weeks if the jobless rate dipped below 4.25%.
“When unemployment is below 6% there literally is almost no reason why anybody can’t get a job,” Fann said.
Only thing is, that rate at which the duration of benefits drops would be determined on a statewide basis. And that means a stronger employment situation in the state’s metro areas, especially in Maricopa County, could curtail benefits elsewhere.
That bothered Rep. Randall Friese, D-Tucson.
“That is troubling,” he told Capitol Media Services after the hearing. “Certain areas are hit harder than others.”
History has shown that to be the case.
Consider the recession of 2009 and 2010 when the statewide jobless rate went to 10.6%.
By late 2015 that figure had dropped to 5.8%. That was driven largely by a healthy 4.8% unemployment rate in Maricopa County and 5.2% in Pima County.
At the same time, though, the jobless rate was 6.9% in Graham County, 7.6% in Gila County, 12.1% in Apache County and 19.2% in Yuma County.
But given the verbiage in SB 1411, the number of weeks of eligibility would decline for everyone statewide.
Friese said he doesn’t like the triggers at all, whether determined on a local or statewide basis.
“If our unemployment rate is in the 4.25% to 6% range, we could be having 44,000 Arizonans lose their benefits short of where we are today,” he said.
But Friese said it’s clear that the triggers will remain.
“I have to be a realist here,” he said. So Friese said he hopes to work with Fann to at least get the legislation adjusted so that the question of how long someone collects benefits is determined on a county-by-county basis.
Other provisions, however, were welcomed by most legislators.
One in particular deals with the fact that under current law anyone who earns more than $30 a week is ineligible for benefits. That number, said Fann, has not been adjusted for 36 years.
Her legislation takes that to $160, a figure that Fann said will help people to pay for things like food and mortgage given that, even with higher unemployment benefits, it will be hard to cover those.
Fann, however, said she sees something more important: keeping people connected to the workforce.
She said this allows a company that doesn’t need a full-time worker, perhaps because of a slowdown, to still keep that person on the payroll for several hours a week. That, Fann said, keeps the employee connected to the company and coworkers.
Potentially more significant, she said it makes it more likely they will go back to work when the opportunity presents itself.
Even with the curtailed number of weeks of benefits in some circumstances, the change will cost money.
Currently, all employers pay a tax based on the first $7,000 of each worker’s salary. Rates are based on how frequently a company lays off workers and range from less than 1% to 11.6%.
The Department of Economic Security figures the average tax rate is 2.28%, or about $160 a year.
SB 1411 would hike the base to the first $8,000 of worker pay, adding about another $23 per year per worker.
The final committee vote to send the measure to the full House was 10-3.
Rep. Regina Cobb, R-Kingman, said she still has questions about the impact on business, even if the trust fund that pays for benefits can be supplemented with money the state is getting from the federal government in the coronavirus relief package.
“The timing is not good,” she said.