Legislature mulls raising Arizona’s low unemployment pay

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Arizona’s super-low $240 maximum weekly unemployment benefit would increase to $320 by mid-summer and employers would have a small increase in their premiums under a new proposal unveiled Tuesday by Republican Senate President Karen Fann.

Fann’s proposal appears to have bipartisan support in the Senate but differs from a plan backed by all House Democrats and some House Republicans.

Rep. David Cook, the House sponsor, questioned how Fann can justify an additional $20 per week over his plan without further boosting premiums.

The state’s weekly unemployment pay is the 2nd lowest in the nation, above only Mississippi’s $235, and would increase to $320 under Fann’s proposal.

It would rise to $400 when the state’s nearly depleted unemployment trust fund is back at normal levels of about $1.5 billion. At $320 a week, Arizona would still pay the 5th lowest weekly rate in the U.S.

In addition, laid-off workers would be able to take more part-time work without losing their benefits. Arizona currently allows workers to earn only $30 a week before benefits are reduced. That amount would rise to $160 under both proposals.

“It keeps the employee engaged in the workforce,” Fann told the Senate Appropriations Committee, which advanced the measure on a 9-1 vote.

“It’s kind of like school,” she added. “If you drop out of school it’s very difficult to get them to go back in. But if they keep engaged with their workforce colleagues, if they feel like they’re part of that whole work, they are more likely to back to work.”

Employers who currently pay premiums on the first $7,000 of yearly wages would see that increased to $8,000 on Jan. 1 and $9,000 in wages in January 2023.

That would boost the current premium average of about $160 a year by $10 to $15, according to figures Cook provided.

Cook said he is optimistic that the Senate and House will come to an agreement of some kind, and believes his proposal boosted the momentum for the Senate to act. But while he wants to boost unemployment pay, it must be paid for, and he’s not sure Fann’s plan does that.

“Here’s the deal – their bill increases benefits more weekly, but the question is are they achievable and are they paid for,” Cook said.

Cook said he set his new maximum unemployment rate at $300 based on calculations of increased premium revenue and questioned how Fann got to $320 a week. His plan also increases the “income disregard” to $160.

But Fann’s plan limits benefits to 20 weeks, down from the standard 26 weeks when unemployment levels drop below 6%. Above that level, the standard 26 weeks apply. And there are times, such as the current coronavirus pandemic, when that is extended by either federal or state action.

Fann said before January’s legislative session started that an increase in unemployment pay wasn’t in the works this year because of concerns it would hurt businesses. But she said Senate Democrats and some Republicans persuaded her to act now.

Her proposal phases in both premium and pay increases to limit the impact to businesses.

“Remember we’re still in the middle of a COVID crisis and we have a lot of businesses that are still trying to get back on their feet much less survive,” Fann said in an interview. “This is why we need to phase this in a little bit and take a couple steps both for the people receiving benefits and for the people paying the premiums on this.”

Fann said the business community and the Arizona Chamber of Commerce and Industry support her plan.

But Garrick Taylor, the chamber’s interim president and CEO, said that’s not exactly true. The group wants to work with both parties to modernize the unemployment system, but can’t fully back either plan now because of uncertainty about the unemployment trust fund balance and the potential for more federal relief.

“We want to keep the unemployment insurance trust fund healthy, and we want to limit harm to employers who are responsible for contributing to the trust fund, especially during a soft economy brought on by the pandemic,” Taylor said.

Arizona’s unemployment soared after layoffs triggered by the pandemic in March. The trust fund, which builds up cash during periods of low unemployment, was at $1.1 billion before the pandemic hit a year ago.

This week, it is below $90 million, although Republican Gov. Doug Ducey plans to use $134 million in federal virus relief funds to boost that balance.

Republished with the permission of the Associated Press.