Unemployment Insurance

Regular readers will be interested to learn that the Unemployment Insurance Trust Fund for the state of Vermont is in much better shape than a few months ago. For a long time providing unemployment insurance required no additional payment from employers and the employees who were collecting from this fund got increasingly generous benefits. All worked well until the economy crashed. And then when an ocean of red ink faced the legislators, some serious corrections were made in the entire fund.

Basically the fix involved increasing the base wage on which employers pay and reducing the benefits that were paid out. The base wage threshold will shortly rise again to $18,000. Employees who need to collect from the fund now get less in the maximum unemployment check and there is a one week delay before payments start. There were other changes too, but the state still needed to borrow a lot of money from the federal government to keep the Unemployment Trust Fund going through the worst of the recession. The borrowed money of course has to be paid back. Total debt was originally expected to be over $350 million.

I am pleased to report that of all these efforts combined with improvement in the economy have had positive impacts on the fund, which is now in relatively good shape. The balance sheets now show a debt of $77 million, which though substantial is much better than predicted.

A plan is being proposed to pay this off early. Reducing debt is always a good thing because it reduces interest payments and overall expenditure. If this debt is removed the state will save about $3 million in interest payments, but also Vermont employers will save approximately $6 million in payments into the Trust Fund. The repayment would take about $30 million out of the Trust Fund itself and the remainder from the budget stabilization funds. This proposal has yet to make its way though money committees, but the State Treasurer and Commissioner of Labor are in favor of the plan. Much discussion on this proposal will follow.

If you’d like more information on this proposal or any other issue involving state government contact me at cbranagan@leg.state.vt.us . I want to hear from you.

Rep. Carolyn Branagan
Franklin-1, Fairfax/Georgia
Vermont House of Representatives