HB 1111 – Unemployment
Authored by Rep. Dan Leonard (R-Huntington)
Sponsored by Sen. John Ruckelshaus (R-Indianapolis)

Provides a new schedule of rates for calendar years after December 31, 2020. Provides new contribution rates for calendar years after 2020. The bill reduces the number of schedules from nine to five. It also locks in rates through 2025 – currently Schedule E that will become the new Schedule C.  After 2025, the bill sets trigger amounts that could move the rates up or down based upon the balance of the trust fund.

Chamber position: Support

The latest: Testimony was taken and the bill was held in the Senate Pensions and Labor Committee. One amendment that’s expected to be incorporated would remove “guard rails” within the first five years. This was a provision that said if the trust fund balance drops below $700 million or increases to $1.8 billion, it would trigger a schedule change.

Indiana Chamber action/commentary: According to the U.S. Department of Labor, Indiana’s balance for solvency should be around $1.7 -$1.8 billion. At the end of 2019, the balance was $856 million and there will be over $1 billion around the first of May. The Chamber testified that Rep. Leonard, the Department of Workforce Development (DWD), Chamber and Indiana Manufacturers Association had worked on this issue throughout the summer.

Moreover, there are really two things that we have learned from the Great Recession: 1) We don’t want to be in a situation where we have to borrow $2 billion again from the federal government and  2) More importantly, we want to avoid a Federal Unemployment Tax Act (FUTA) credit reduction because that reduction raises the taxes paid to the federal government and that is on top of an employer’s state tax unemployment insurance tax (SUTA). We believe that this bill currently represents the right balance for stability and consistency for employers, without specifically raising taxes and taking too much out of the economy.

The Indiana State Building and Construction Trades Council testified that it was time to increase the unemployment insurance benefit for unemployed workers. There has not been a benefit increase for some time. Senator Karen Tallian (D-Portage) requested that DWD provide information on what an increase in the wage base for SUTA purposes would do to the revenue stream at an increase of $1,500; currently that base is at $9,500 for SUTA. (The wage base for FUTA purposes is $7,000.)

In a discussion with the Chamber, Rep. Leonard indicated that he would like the Senate to get the bill in a form that could be concurred on when it returns to the House. It is anticipated that committee chairman Phil Boots (R-Crawfordsville) will move the bill next week. The bill was held this week in deference to Sen. Tallian to come up with numbers related to a wage base increase. When asked privately by Sen. Ruckelshaus if the Chamber would support a benefit increase this session, we said let’s get the solvency issue resolved this year, and then we will talk about a benefit increase in the future.

Resource: Mike Ripley at (317) 264-6883 or email: mripley@indianachamber.com