By Howard Fischer
Capitol Media Services
PHOENIX -- Arizonans who find themselves out of work through no fault of their own could get their first increase in benefits in 17 years.
Members of the Senate Appropriations Committee voted 9-1 Tuesday to set the maximum benefit to $320 a week as early as this summer. The current cap of $240 was set in 2004 and is the second lowest in the country; only Mississippi pays less.
And then, if the employer financed trust fund that pays for benefits gets back into healthy territory, the maximum automatically would go to $400 a week.
But that's not all.
Individuals would be able to earn up to $160 a week without losing benefits, whether while looking for a new full-time gig or remaining on a part-time status with a current employer. Now, anything over $30 disqualifies the employee.
And to finance all that, employers would pay more in the taxes that finance the benefits.
What makes all that significant is that SB 1411 is being pushed by Senate President Karen Fann, R-Prescott. Prior perennial efforts to increase the benefits by Democrats have met with GOP resistance.
More to the point, Fann said she worked with business interests to get the necessary buy-in. The result is that no one from the business community has come out in opposition.
There is a trade-off of sorts.
Current law allows state benefit to continue for up to 26 weeks, not counting special federal programs. SB 1411 would drop that to 20 weeks -- but only when the state's jobless rate is less than 6%.
Still, there are objections.
Sen. Michelle Ugenti-Rita, R-Scottsdale, the lone dissent on the measure, said she's concerned that there isn't enough in the law to ensure that people collecting benefits are actually out searching for a new job.
There already are requirements in law, including a mandate to make contacts with potential employers at least four days a week. And after four weeks of benefits, people generally have to take any job that pays them at least 20% more than they're collecting.
But that work search requirement has been suspended during the pandemic by the executive order Gov. Doug Ducey signed last year due to the COVID-19 pandemic. Among the reasons ae that people may need to stay home either because they have contracted the virus or are the caretaker for someone who is ill.
"So we're just going to pay people to be unemployed?'' Ugenti-Rita asked.
And there's another potential hurdle.
Ducey has consistently opposed any benefit increase, even as the state's jobless rate topped 13% during the pandemic-induced recession, brushing aside questions of whether he could survive on $240 a week. He said that in normal times -- meaning before the pandemic -- there were plenty of jobs out there for people to find "at any time'' and he sees no need to adjust that $240 figure.
Fann said she has informed the governor's office about the details of her measure. The only thing that gubernatorial press aide C.J. Karamargin would say to Capitol Media Services is that Ducey is "reviewing the measure.''
Unemployment benefits are supposed to be a safety net for those who are fired or laid off through no fault of their own.
By law, those benefits are supposed to equal half of what someone was earning. But all that is subject to the cap of $240.
Much of the resistance until now has come from business interests because those payments are financed by a tax that employers pay on the first $7,000 of each worker's salary.
What employers actually pay in taxes is based on how often a company lays off workers, with a tax rate of less than 1% to more than 13%. The Department of Economic Security says the average tax this past year was 1.3%, meaning $112 a year per worker.
Fann proposes to finance the higher benefits in SB 1411 by increasing the base on which the tax is paid, which she said has not been altered since 1986, to $8,000 next year and $9,000 in 2023.
But Fann figures that reducing the maximum time someone can collect benefits, coupled with an improvement in the Arizona economy, will result in a minimal financial hit.
The key is that 6% trigger.
"When the unemployment rate is 6% or higher, people are having a little more difficult time getting jobs, whether it's COVID, whether it's the economy or whatever,'' she told Capitol Media Services. Under those circumstances, the current 26-week limit makes sense.
"However, when it's below 6%, that's when our economy is thriving,'' Fann said.
"That's when we have a lot of jobs out there,'' she continued. "And, quite honestly, anybody that wants a job can get a job.''
Arizona's jobless rate was less than 6% from September 2015 right up through February of this year when the pandemic closed many businesses and Arizonans stopped going out. It hit 13.4% in April; the most recent figure for December was 7.5%.
There are no projections about when the state jobless rate will again drop below 6%.
Fann's bill has one other provision she figures will help both workers and employers.
Current law says anyone who earns more than $30 a week is disqualified from benefits, a limit enacted in 1986. SB 1411 would boost that to $160 "That means somebody can work roughly 12 hours at $13 an hour without getting dinged on their unemployment,'' Fann said. "It keeps them part of the whole system.''
That, she said, is critical.
"It's like dropping out of school: Once you drop out of the workforce, trying to get people back into the workforce is a real challenge,'' Fann said. And she figures that, with the state's low jobless benefits, being able to earn a bit extra on the side will help people keep up with the rent and utility bills.
But there's a flip side she said will help businesses.
"Look at what happened during COVID when everybody was in a real turmoil,'' Fann said, with employers not knowing when workers would be well enough to come in and a fluctuating demand for services.
On one hand, she said, it allows a company with a reduced demand to hang on to all of its workers by promising each of them 12 hours a week while they still can collect benefits.
Conversely, Fann said, a business may need its full staff "only during the crazy business times.'' This ensures workers are available perhaps for four hours a day for three days a week.
Sen. Kelly Townsend, R-Mesa, said SB 1411 doesn't go far enough.
She said the Department of Economic Security, which administers the unemployment system, has been beset with a series of problems that have resulted in people who are eligible for benefits not getting them.
"I know there are people in arrears to their rent, to their mortgage, who haven't received their unemployment for one reason or the next or are just now getting it,'' Townsend said, saying the agency needs more accountability. She said even if the state increases benefit levels it won't do any good unless the dollars get into the hands of those who are entitled to them.
SB 1411 goes to the full Senate after a required review by the Rules Committee of its constitutionality.
Fann isn't the only Republican interested in adjusting jobless benefits.
Rep. David Cook, R-Globe, is sponsoring HB 2805 which would raise the cap to $300 a week. That measure, like what Fann is proposing, also would allow people to earn up to $160 a week without losing benefits.
His bill cleared a House panel and awaits action by the full chamber.
