Both houses of the Pennsylvania legislature recently passed Senate Bill (SB) 1310, legislation aimed at restoring the commonwealth’s Unemployment Compensation (UC) Trust Fund in part by refinancing $3.87 billion in loans from the U.S. Department of Labor. Governor Tom Corbett is expected to sign the bill.
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!“This debt created an escalating per-employee tax and was threatening Pennsylvania jobs,” Governor Corbett said. “Thanks to the legislature’s quick action on this jobs bill, employers will not have to worry about unpredictable repayment costs and solvency will be restored to the trust fund.”
If approved, the bill would allow Pennsylvania to issue up to $4.5 billion in bonds to repay the federal government, lowering interest rates and lessening the repayment burden on employers. In addition, the bill would increase Pennsylvania’s taxable wage base and impose new benefit restrictions beginning in 2013.
“Even without the recession and increased unemployment, our system was headed for a structural deficit because revenues to the fund were capped while benefits increased based upon the average weekly wage,” said bill sponsor Senator John Gordner. “This legislation corrects the imbalance.”
Under SB 1310, the taxable wage base would increase from $8,000 to $8,500 in 2013 and thereafter by $250 per year until reaching $10,000 in 2018. The bill would also limit annual increases in the maximum weekly benefit through 2018. In addition, the legislation provides for a 3-month amnesty period that would allow businesses to waive 50 percent of their interest costs if they pay outstanding debts to the UC fund.
To control benefit costs, the legislation would also require workers to earn 49.5 percent of their base year wages outside their highest-earning quarter, up from 20 percent under current law. The American Federation of Labor and Congress of Industrial Organizations estimates that this will cut 48,000 workers from the program.
Some lawmakers objected to the changes. “In an economy that may just be beginning to recover from a devastating recession, I have genuine concerns about reducing eligibility,” said Senator Christine Tartaglione, who voted against the bill.