Thursday, February 04, 2010

Will Tennessee Really Reduce Unemployment Pay After Being Fourth Lowest?

With Tennessee's jobless rate persistently in double digits, the idea of cutting weekly benefits has emerged as one way to keep the state's unemployment compensation fund in the black.

That seems like a smart plan to cash-strapped small-business owners, who are paying higher taxes after an increase to keep the fund solvent last year, and some say another tax increase could push them under.

But laid-off workers say the maximum weekly amount is already too low and shouldn't be tampered with.

"They should be looking at raising it," said Jerry R. Baldwin, a Brentwood man who has drawn unemployment checks for 14 months after the distribution company where he worked closed.

In Tennessee, the most a laid-off worker can get each week in unemployment benefits is $275, the fourth-lowest rate in the nation and a tie with Florida. (The rate has been bumped up temporarily to $300 a week with a $25 federal stimulus add-on.)

Some small-business owners say a cut in workers' benefits would help keep the overall unemployment fund functional.

"I don't see how we could get around it," said Kenneth Gough, president and general manager of Accurate Machine Products Corp.

The state's unemployment compensation fund stood at $630 million before the recession started. But the pool of money has been drawn all the way down to $103 million as about 170,000 unemployment checks are sent out each week.

The fund is expected to go $20 million in the red in April, but a no-interest federal loan is expected to cover the gap until tax revenues start coming in, said Bill Fox, an economist from the University of Tennessee who advises the state on the trust fund that pays jobless benefits.

However, another shortfall — this one even larger — is expected once again in 2011.

That uncertainty has everyone preparing for a whole slew of what-ifs.

"This is a problem that is not going away," said state House Speaker Kent Williams, R-Elizabethton. "Further taxation is not the answer."

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