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Arizona Senate Approves Unemployment Benefit Raise

OLIVIER DOULIERY AFP VIA GETTY IMAGES

By Howard Fischer
Capitol Media Services
PHOENIX -- With just minor opposition, the state Senate voted 25-4 Thursday for the first increase in unemployment benefits since 2004.
SB 1411 would move the cap next year to $320 a week. That's $80 more than the maximum anyone laid off or fired through no fault of their own can now collect.
But there are trade-offs.

Right now someone who qualifies for benefits can collect checks from the state for up to 26 weeks.
As approved, the measure crafted by Senate President Karen Fann says that would drop to 22 weeks any time the unemployment rate was 6 % or less.

"We know that people will get back to work in that time in times of good economic development,'' the Prescott Republican said.

She originally had wanted that to drop back to 20 weeks at that point but agreed to that compromise to pick up support from Democrats. That was crucial as several Republicans refused to support the plan.

The last time the state jobless rate was below 6% was August 2020.
But Fann did get part of what she sought: The cap would, in fact, drop to 20 weeks whenever the jobless rate was less than 4.25%, a figure the state hasn't seen since January 2008
To finance all this is going to mean employers are going to pay more.

Companies pay a tax based on the first $7,000 of each worker's salary.
The actual tax rate is based on each firm's history: Those that tend to keep their workers are paying less than 1%; companies with higher turnover can end up with an 11.6% tax.

Right now, according to the Department of Economic Security, the average tax rate is 2.28%, or about $160 a year.

Fann's bill would increase the base this coming year to $8,000, adding about another $23 a year per worker. She said the move is not only good for the health of the trust fund that finances the benefits but is long overdue, as are the benefits themselves.

"The $7,000 base on employee wages, that has not been increased for 36 years either,'' she said.
Here, too, there was another compromise.

Her original plan would have boosted that to $9,000 in 2023 to ensure there is enough money in the trust fund , a move that raised some concerns among business owners. Fann said that proved unnecessary.

"We got updated numbers from the Joint Legislative Budget Committee,'' she told Capitol Media Services. "We will be fine just going to the $8,000 next year.''
The legislation also contains another significant change.

Under current law, once someone earns $30 a week, the jobless benefits end. SB 1411 hikes that to $160.

She said that benefits not just workers who lose full-time jobs but also employers. She said it would allow a firm that now needs a part-time worker to convince them to come back a couple of days a week, knowing they won't lose their benefits.
The package has other items designed to attract votes.

On one side, it sets up an automatic increase in benefits to $400 a week. But that won't happen unless and until the trust fund, now effectively broke, is restored to its full strength of more than $1 billion.

But Fann, seeking to appeal to business concerns, also agreed to put in statute a series of provisions she said are designed to prevent fraud.

She said there were some "major fraud problems'' last year at the Department of Economic Security which administers the benefits, much of that due to a flood of applications as the state's unemployment rate went up and the federal government began offering additional benefits. The new requirements, Fann said, will "make sure that we're paying exactly who needs to be paid and not people -- and I'm not kidding -- from Russia.''

Garrick Taylor, acting president of the Arizona Chamber of Commerce and Industry, said the plan has the blessing of key elements of the business community. He said there is a coalition that sees this as a way to update the state's unemployment insurance system "in a way that helps Arizonans get back to work while also preventing fraudulent claims and minimizing the potential negative impacts on employers.''
That, however, did not convince some Senate Republicans.

Sen. J.D. Mesnard, R-Chandler, said this should have been part of a broader plan to deal with overall unemployment and the economy rather than just approving something that will increase the cost of the program on businesses.

For Sen. Sine Kerr, R-Buckeye, what's in SB 1411 -- and the cost to employers -- is a little premature.

"I still have businesses in my district that are still hurting and trying to recover,'' she said.
Sen. Kelly Townsend, R-Mesa, said the measure lacks one thing: accountability by DES.
"I think that we're forgetting a very important aspect of unemployment and how everyone suffered this last year due to an outdated and archaic system,'' she said. Townsend also said that people who were due benefits could not get anyone at DES to answer their phone calls or return emails and was clearly unable to handle the volume of applications they got.

"That needs to be fixed first before we continue to put more money into the system.

The measure now goes to the House which already has approved a similar but competing measure sponsored by Rep. David Cook, R-Globe. The most significant differences is that his HB 2805 would increase the benefits only to $300 a week but would not cut the eligibility to less than 26 weeks regardless of the state unemployment rate.

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