Daily Legislative Update
Wednesday, January 27, 2010
87th General Assembly—Fiscal Session
BUDGET HEARINGS CONCLUDED—ONLY TWO RESOLUTIONS FILED
The Joint Budget Committee concluded its pre-session hearings last week and unless an issue pops up that requires the chairman to call the committee back, they will not meet again until the Budget Session opens on Monday, February 8.
Meanwhile, multiple sources are indicating that the Budget Session will conclude on March 2.
The Arkansas Legislative Digest is reporting that the House of Representatives has moved their meeting to elect the next Speaker of the House from March 24 (the 45th day of the Budget Session) to March 9, which would be the 30th day of the Budget Session.
Bill pre-filing has been open since January 11, but so far only two resolutions have been filed. Both filings address Revenue Stabilization:
SCR 1 Authorizes the Joint Budget Committee to introduce the Revenue Stabilization Law and provides the approximate language as it will appear.
HCR 1002 Authorizes Representative Bruce Maloch to introduce the Revenue Stabilization Law and provides the approximate language as it will appear.
Rumors remain consistent that the only big “non-budget” issue expected to come up in the Budget Session is related to the college scholarship lottery.
UNEMPLOYMENT INSURANCE
In the pre-session budget hearings, the Department of Workforce Services (DWS) was heavily questioned by legislators about the growing deficit of the Unemployment Insurance Trust Fund. Also, Senator Larry Teague indicated his intent to file a bill during the Budget Session to address the state’s UI Trust Fund; however it is not likely to receive the necessary two-thirds vote of both chambers to be considered.
As of January 21, 2010,
At the December 8, 2009 meeting of the ESD Advisory Council the DWS staff projected Arkansas’s UI Trust Fund would have a negative balance of ($350.3) million by the end of 2010 and a negative balance of ($380.6) million by the end of 2011.
Four members of the State
Chamber/AIA Unemployment Insurance/HR Committee and one staff member fill the
management spots on the ESD Advisory Council. The Council also has five
representatives from labor and three consumer representatives. This Council has
been in place for at least 50 years and has negotiated changes to the state UI
laws and presented “agreed” legislation to each General Assembly.
The last time an agreement could not be reached was in the late 1960s when
labor wanted to index the state’s UI benefits and management would not
agree. The legislature sided with labor and consequently
The ESD Advisory Council has
maintained a UI Trust Fund balance between $100 million and $200 million for
many years. As representatives of management, we have agreed with this balance
range because we did not want to over-tax the business community. Over the past
five decades, management has agreed to increase the “taxable wage”
base three to five times to increase the trust fund balance. By the end of
2008, the UI Trust Fund balance had fallen below $100 million and the ESD
Advisory Council began a discussion of another wage base increase. DWS staff
was projecting a $44 million balance in the UI Trust Fund by the end of March
2009 and then the largest collections would begin in April. However, as 2008
drew to a close, the Great Recession hit and unemployment numbers skyrocketed,
requiring
Early in the 2009 Regular Legislative Session, legislation was proposed by the ESD Advisory Council that increased the taxable wage base from $10,000 to $12,000 effective January 1, 2010 and treated quits and discharges in a similar fashion. The wage base increase was projected to increase the trust fund’s deposits by almost $50 million a year and the equalization of the quits and discharges is currently projected to save close to $40 million.
Our preference is to address the trust fund debt as follows. First, allow the changes put in place last year to take their full effect. Second, allow more time for the economy to recover. Third, allow time for the federal government to address the issue of almost every state owing a significant sum of money. Finally, the State Chamber/AIA Unemployment Insurance Committee would like to spend the year analyzing data, seeking input from our members and reviewing other states’ approaches to the problem. Our committee is committed to finding the proper solution.
CONTACT INFORMATION
When
Legislature is in session:
State Senators: 501-682-2902
State Representatives: 501-682-6211
State Chamber/AIA
Staff
President/CEO:
rzook@arkansasstatechamber.com
Kenny Hall
khall@arkansasstatechamber.com
Angela DeLille
State Chamber/AIA
phone: (501) 372-2222
State
Chamber/AIA web site: www.arkansasstatechamber.com
