Stimulus funds to boost unemployment benefits - East Valley Tribune: East Valley Local News

Stimulus funds to boost unemployment benefits

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Posted: Monday, March 23, 2009 11:50 pm | Updated: 1:19 am, Sat Oct 8, 2011.

More than 70,000 Arizonans who have lost their jobs will be getting an extra $25 a week. Gov. Jan Brewer has agreed to accept extra funds for unemployment benefits made available to the state as part of the federal stimulus package, Capitol Media Services has learned.

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Gubernatorial press aide Paul Senseman said people should begin seeing the additional cash by the end of the month.

In fact, the first check they get could have an extra bump: Senseman said the higher benefits will be retroactive to those who were eligible as of the week of March 1.

The change Brewer approved benefits not just those already out of work: Anyone who is laid off or fired for no fault of their own through the end of this year would be entitled to that extra $25 for the entire time they collect benefits, up to 26 weeks.

Senseman said Brewer saw no reason to reject the dollars, estimated by legislative budget staffers at $84 million, as there are no strings attached. He said when the money runs out, payments will go back to what they were at the beginning of this year: a maximum of $240 a week.

But assuming all the other states take the same extra $25, that additional cash will still leave the unemployed in Arizona getting the third lowest benefits in the nation: Only Mississippi at $210 a week and Alabama at $235 pay less.

While agreeing to hike benefits, Brewer has not yet decided whether to take another $150 million in stimulus dollars that could provide jobless aid to more individuals. Senseman said the governor is concerned that taking the "free" money now could end up raising costs eventually on companies that do business in Arizona.

Under Arizona law, those who lose a job through no fault of their own are entitled to half of what they were earning, up to that maximum of $240 a week. That means anyone making more than $24,960 a year is ineligible for full half-pay benefits.

Generally speaking, people let go through no fault of their own are entitled to benefits for up to 26 weeks, as long as they are available for and seeking employment.

Arizona could get an extra $100 million this year if it expands its eligibility requirements. According to legislative staffers, states have to enact two out of four provisions into law:

Allowing those who have part-time work to collect benefits;

giving payments to those enrolled in job training programs;

providing an additional allowance to care for dependent family members;

permitting someone to collect payments who has quit a job because of some compelling reason, like domestic violence.

Arizona law already covers the fourth situation, meaning legislators would need to make only one other change to get the extra cash.

The problem, said Senseman, is that the state would be legally precluded from changing the law back to the way it is now once that federal cash runs out.

"In the long run, it may impact the unemployment insurance tax rate that employers are going to have to deal with in the future," he said.

The key is that benefits are paid from a fund financed by a tax that all employers pay on the first $7,000 of each worker's income. The tax rate is based on how much is in the fund.

Pati Urias, spokeswoman for the state Department of Commerce, said that fund is in "really good shape" right now, even with the state's unemployment rate at 7.4 percent and continuing to rise.

But Urias said the tax is counter-cyclical: It is designed to go up when the unemployment rate is low to replenish the account.

Making more people eligible for future benefits would increase payouts - and, eventually, come back in the form of higher taxes on employers.

Senseman said Brewer has not yet made a decision. But he noted that Texas Gov. Rick Perry, a Republican like Brewer, just last week rejected taking the extra jobless money for precisely the concerns that the governor here has.

"Every dollar an employer must spend on higher taxes is a dollar less that the employer has to put toward creating another job and expanding business - and getting this economy moving again," Perry wrote to President Obama.

Perry also estimated the extra cash would cover his state's extra costs only for seven years, eventually raising taxes by more than $300 million to cover the expanded benefits for the five following years.

Senseman said Brewer's office has done no such calculations yet.

The other change still being reviewed by Brewer deals with how the state calculates whether an individual has made enough money to be entitled to collect benefits.

According to the Children's Action Alliance, that change alone would make an additional 7,000 people eligible for payments. And the state would get an additional $100 million for making that change.

Senseman said that here, too, the question is the long-term cost to Arizona employers once the federal dollars run out.

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