Cuts to jobless benefits get OK

Bill to be revised, then go to Senate

Posted: February 16, 2017 at 2:20 a.m.

Cuts to Arkansas' unemployment benefits were approved by the House on Wednesday as part of a bill that also reduces taxes on employers.

As passed by the House on a 62-26 vote, House Bill 1405 would reduce the length of unemployment benefits from 20 weeks to 16 starting in 2018, and would cut the amount of those benefits by 13 percent.

But the sponsor of the legislation, Rep. Robin Lundstrum, R-Elm Springs, said the bill is already in the process of being amended to eliminate the reduction in the benefit amount before it is considered by the Senate.

The bill also proposes the reduction of the taxes businesses pay into the state's unemployment insurance fund. Currently, businesses pay taxes of up to $12,000 in each worker's annual wage, and that amount would be reduced to $10,000 starting in 2018.

That fund has reached $531 million -- enough to cover at least three years of 10 percent unemployment, Lundstrum told colleagues on the House floor. The state's unemployment rate in December was 3.9 percent, according to the Division of Workforce Services.

"This is the proper time to make that adjustment -- when there is very little pain involved," Lundstrum said.

While offering support for the business tax cut, Democrats and union members who have spoken against the bill said it unfairly targets down-on-their-luck workers. House Minority Leader Michael John Gray, D-Augusta, was the only lawmaker to speak against the bill on the House floor Wednesday.

"Think about someone who has lost their job in a rural area that has to relocate their family to get a new job," Gray said. "Reducing it to 16 [weeks] is an unnecessary burden on working Arkansans compared to the states around us."

With the exception of Missouri, every state surrounding Arkansas offers 26 weeks of unemployment benefits. Missouri offers 20 weeks, though an attempt to cut that amount to 13 weeks was struck down by the state's Supreme Court, according to news reports.

The Arkansas Legislature previously cut the weeks of eligible benefits from 25 during the 2015 session.

Lundstrum said there is not a fiscal need for further cuts to the length of benefits, but doing so would incentivize employment.

"Every time you reduce weeks, people go back to work," she said.

In order to pay for an income tax exemption for military retirement benefits, the Legislature recently approved a plan to levy income taxes on unemployment benefits.

Lundstrum's bill would also cut unemployment benefits by the number of weeks a person earns severance pay, to prevent "double dipping," she said.

Representatives from Arkansas AFL-CIO and the Arkansas Advocates for Children and Families have said they oppose the bill, the Arkansas Democrat-Gazette previously reported.

Lundstrum said she agreed to remove cuts to benefit amounts after hearing feedback from a variety of groups, though she declined to say which ones.

Business on 02/16/2017