President’s UI tax plan far from a done deal…kind of like the governor’s better idea

Yesterday Emily wrote about President Obama’s plan to allow states to raise their unemployment insurance taxes and provide some temporary debt relief to states that have borrowed from the feds. Today that plan appears to be in a little trouble. The Wall Street Journal reports that Capitol Hill Republicans oppose the proposal, though states that would benefit seem to like it. Washington is not one of those states. The WSJ includes this comment from our state’s top administrator.

Paul Trause, employment security commissioner for Washington State, said, “The current proposal provides no recognition or reward for the employers in our state that have paid higher taxes for a number of years to ensure that our trust fund remains solvent during tough economic times.”

More on the president’s plan and its prospects in the Washington Post, New York Times and Stateline.org.

Of immediate significance to employers here is the continued wrangling in Olympia over the governor’s proposal to provide tax relief to those employers who “have paid higher taxes for a number of years.” The governor offered a clean UI tax bill that would have capped a scheduled increased increase in UI taxes. The Seattle Times liked the plan, as did most businesses in the state. Organized labor wanted to add a new dependent’s credit and a kerfuffle ensued. An agreement is needed soon to give the employment security department time to, well, I like the way the Times editorial puts it,

so the Employment Security Department would have time to salt, pepper and stir their computers.

It’s a big deal. Jerry Cornfield explains the effects of the tax relief in the Everett Herald, while reporting that another day may go by without resolution.

Not increasing the taxes will help more than 90 percent of businesses and save them a an estimated $300 million collectively, according to legislative analyses.

In Washington State Wire, Erik Smith examines the broad implications.

The immediate dispute involves a complicated bit of political gamesmanship regarding the initial unemployment bill. Its structure will determine whether business or labor has the upper hand in negotiations later in the session. If no bill passes quickly, it’s likely that everything will fall apart – the tax break and everything else….

If everything falls apart, there’s going to be a blowup like you wouldn’t believe, said state Rep. Cary Condotta, R-Wenatchee, the ranking Republican on the House labor panel.

As we have noted before, Washington employers currently pay among the nation’s highest UI taxes and Washington workers receive some of the nation’s most generous benefits. A swift resolution to provide necessary relief should not be out of reach.