Beacon Hill lawmakers approved and sent to Governor Deval Patrick today an Unemployment Insurance rate freeze bill that will limit the average UI tax increase for employers during 2011 to $61 per employee.
Patrick is expected to sign the measure. It heads off an average 40 percent jump in UI taxes set to hit employers next month after rates automatically increased from Schedule E to Schedule G. Schedule G would have increased overall UI contributions from Massachusetts employers from $1.576 billion to $2.235 billion.
The House of Representatives approved the freeze early this afternoon by a margin of 152 to 0 and the Senate gave final approval just after 2:30 p.m. Both chambers added an emergency preamble that will allow the measure to take effect immediately upon the governor’s signature.
“It’s gratifying that Massachusetts legislators have used their first major votes of the 2011-2012 session to create jobs and sustain the economic recovery. Lawmakers recognize that financial position of the Unemployment Insurance Trust Fund is improving and does not require a dramatic increase in employer payments,” said Richard C. Lord, President and Chief Executive Officer of AIM.
AIM has maintained for months that a UI rate increase is unnecessary and excessive. A significant decrease in the number of claims for unemployment prompted state officials in December to revise their estimate of the Trust Fund balance from a negative $302 million to a positive $12.7 million.
The automatic UI tax increases would have come on top of a 50 percent jump in the assessment on employers for a fund that provides medical insurance to unemployed people. The Unemployment Health Insurance Rate Review Board voted in December to raise the employer contribution rate for the Medical Security Trust Fund from $33.60 to $50.40 per employee in an attempt to close a deficit that is projected to reach $95 million by midyear.
Lord said AIM will continue to push for structural reforms to the UI system, including reducing the maximum duration of benefits to 26 weeks and increasing from 15 to 20 weeks the period that employees must work to qualify for benefits.
Several legislators agreed during today's debate that long-term changes are required.
"I'm concerned that we need to do more. Our costs are almost twice what the national average is ... We have some of the most generous benefits. It's not bad being number one but when it’s the most expensive benefit package, it's not a great place to be in to create jobs," said Representative George N. Peterson Jr. of Grafton.