Though Missouri was cleared of its latest unemployment insurance trust fund debt two years ago, the legislative debate has lingered and the state Supreme Court is now caught in the middle.
“I didn’t anticipate things happening the way it did,” said state Rep. Scott Fitzpatrick, R-Shell Knob, who last year filed the hotly contested unemployment insurance reforms.
Legislators passed Fitzpatrick’s House Bill 150, only to see it vetoed by the governor and moved back into law by separate override actions months apart in the legislative chambers.
However, the constitutionality of timing on the Senate’s override vote is in question, and the state’s high court is ruling on how HB 150 became law, not the merits of the legislation.
But the merits have their own debate.
HB 150 seeks to cap unemployment benefits at 13 weeks – one of the lowest in the country – when the state’s unemployment rate is below 6 percent. The theory holds that in a productive economy state unemployment taxes are sufficient to carry the state’s UI fund as it dishes out less in claims. History has shown, though, recession periods bankrupt the fund. Missouri has borrowed federal dollars in each of the last five economic downturns in order to pay out unemployment benefits, and in those instances, businesses foot the bill.
UI reform opponents, including Gov. Jay Nixon in veto actions the last two legislative sessions, say the measures reach too far in limiting unemployment claims and employers’ responsibilities.
“Unemployment insurance benefits provide a bridge for hardworking Missourians looking for another job, while strengthening local economies at the same time,” Nixon said in the statement tied to his May 5 veto of HB 150. “Supporters of this bill have forgotten that workers earn these insurance benefits by working and that tough economic times often last longer than a mere 13 weeks.”
Proponents say the burden on business is too heavy, and the system needs fixed before history repeats itself during the next recession.
“I think it’s fair to share the burden across the employer and the employee to get us to a point we’re not going broke every time there’s a recession,” Fitzpatrick said.
Current economic conditions clearly spell out a healthy UI fund.
According to the state Department of Labor and Industrial Relations, the fund balance was $386.7 million as of Nov. 15, the most recent date on record. Projections based on the U.S. Labor Department’s benefit financing model show fund balances peaking at $1 billion in 2020, before settling at $870.7 million by the end of 2022, the last year of the table.
In the Labor Department’s eight-year forecast, unemployment rates remain below 5 percent. The rate typically is a predictive quotient.
During the height of the Great Recession from late 2008 to early 2012, Greene County recorded 43 successive months with over 1,000 unemployment claims filed. In that time, the county unemployment rate never dropped below 6 percent and rose to 9 percent, according to state data. With more recent improved economic conditions and unemployment in the mid-3 percent to 6 percent, monthly unemployment claims are consistently in the 700s and 800s.
The Springfield Area Chamber of Commerce identified UI reforms, specifically to shore up the trust fund, among its 2016 legislative priorities. Both the local and state chambers support HB 150.
Mike Haynes, chairman of the Springfield chamber’s governmental affairs committee and regional director of external affairs for AT&T, said there are more ways to protect workers and employers. UI reformers have long sought improved vetting of unemployment claims, Haynes said, recounting stories of benefits issued to construction workers fired for urinating in public and office staff found sleeping at their desks.
“I don’t know if this is gong to fix that,” he said of HB 150. “We just want to have the best method possible, that’s fair to all employers and is funded correctly. Sometimes, that means some years you pay a little more and some years you pay a little less.”
HB 150 doesn’t give a free pass to employers.
In another key point, but one far less contentious than the cut of weekly unemployment benefits, the bill raises the UI fund threshold before employers receive tax breaks. When the fund balance reaches $720 million, up from $600 million, an employer’s contribution rate reduces by 7 percent the following year. Should the fund grow to $870 million, up from $750 million, a 12 percent reduction kicks in for employer contributions, according to the bill language.
Fitzpatrick said moving the thresholds is intended to guard against another federal loan.
“It hurts every employer in the state when we have to borrow money,” he said. “It hits those who have never had an unemployment claim, and that’s a federal law. We would like to avoid punishing the people who didn’t contribute to the problem.”
For now, HB 150 remains in limbo. The fall veto session override was quickly challenged in Cole County Circuit Court. Led by the AFL-CIO, the plaintiff’s interpretation of the Missouri Constitution claims the Senate didn’t have override authority because the bill was not vetoed within five days of the legislative session ending – or after, per state statutes. Nixon vetoed HB 150 on May 5, and the legislators adjourned May 15.
In defense, attorneys for the state, including Attorney General Chris Koster, argue the constitution language creates a veto session but does not limit what vetoed bills may be considered. Citing the plenary powers of the Senate, they also say the constitution does not explicitly prohibit Senate override votes in veto sessions.
The Supreme Court first heard arguments Jan. 13 and had not ruled on the case by press time.
