That unemployment debt | Arkansas Blog

Monday, November 29, 2010

That unemployment debt

Posted By on Mon, Nov 29, 2010 at 11:10 AM

It's too complicated to fully explain here, but I learned today that negotiations between labor and management for a solution to the state's burgeoning debt (approaching $400 million) to the federal government on unemployment benefit payments are officially at a standstill. Labor and management each has rejected the other's proposal. The proposals were a combination of increased charges to employers and freezes or reductions in benefits to unemployed workers.

The negotiating committee will meet again in early December. In January, the federal government is scheduled to raise its charge to employers and tack on interest costs to begin getting its money back. There's some hope — since so many states are in this pickle — that the feds will waive interest payments or even forgive some of the debt.

The business lobby has taken the position that it could work out a charge cheaper than the amount the feds will collect. But the charge — which must be approved by the legislature — could prove problematic at a General Assembly with a hefty new contingent of members elected on no-tax, reduced-government pledges. I'm hearing that some important Republicans have said as much to key business lobbyists normally accustomed to getting their way on such business issues.

For the full, technical description of everything about the unemployment benefits formula, I still refer you to Mark Friedman's earlier piece in Arkansas Business.

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