Read the Bills Act Coalition

Thursday, April 9, 2009

DIVORCE....the Virginia Business Community walks out on ALL Democratic candidates for Governor

Posted by MAXIMUS

Madonna leaves Guy Ritchie. Brittany leaves Kevin Federline. Nicole Kidman leaves Tom Cruise. The Virginia Business Community leaves the Democratic Party. Some people 'marry up" in their lifetimes and some "marry down." There comes a seminal moment that reveals a divide that just can't be mended.

The unholy alliance, or marriage, between the Virginia Business Community and the candidates of the Democratic Party is over. The Democrats married up and now the Virginia Business Community has wizened up and is leaving the marriage with the Virginia Democratic Party based on fraudulent representations from the candidates of the self described pro-business Democratic Party. The Virginia Dems married up and Virginia Business Community married down. It's over now.

EXHIBIT ONE from the Virginia Chamber of Commerce in opposition to Governor Tim Kaine's, Terry McAuliffe's, Brian Moran's, and Creigh Deeds' support of EXPANDING the social welfare state through their support of expanding unemployment benefit programs on SB 1495 is listed below in it's entirety:


The American Recovery & Reinvestment Act of 2009 (the federal "stimulus package") contains many provisions affecting the unemployment insurance (UI) program. This package contains a number of provisions designed to increase unemployment benefit payments and provide "incentives" for states to EXPAND the number of individuals who qualify for unemployment compensation.

The "incentives" provision transfers $7 billion in FUTA funds (federal taxes paid by employers) to state accounts if states enact or already have certain state UI laws in place. Of this amount, the Virginia Employment Commission (VEC) estimates that Virginia could receive approximately $187.5 million if all the conditions are met.

To qualify for these "incentive" payments, a state must have an alternate base period which would entitle it to one-third of its share. Virginia enacted this provision in 2003, therefore, it is already eligible to receive $62.5 million.

In order to receive the remaining two-thirds of the funding, or approximately $125 million, the General Assembly must EXPAND our state UI law by passing at least two of the following four provisions:

1. It must provide benefits to former part-time workers who seek part-time work;

2. It must provide additional benefits (up to 26 weeks) to individuals who have exhausted their regular benefits but are enrolled in a state-approved training program or in a job training program. This benefit must prepare the individual for entry into a "high-demand" occupation;

3. It must provide benefits for voluntary separations from work for "compelling family reasons." These reasons must include domestic violence, illness or disability of an immediate family member, and the need to accompany a spouse to a place from where it is impractical to commute and due to a change in the location of the spouse’s employment (i.e., the popular trailing spouse provision);

4. It must provide dependents allowances to UI recipients with children.
During the 2009 General Assembly Session, no bills were introduced or passed that would qualify Virginia for the additional $125 million.

So, here we are…

The Governor will ask you to vote on receiving the remaining $125 million when you return on April 8. Of the four choices on the menu above, he will ask you to EXPAND our law to provide benefits – for the first time - to part time workers seeking part time work and those in job training. Here’s why that is a concern to those listed below.

• In order to receive the remaining $125 million in employer money, you are being asked to EXPAND permanently Virginia’s UI laws for a temporary benefit. When the FUTA monies run out, and they will, Virginia employers will be left to foot the bill. That’s not a good trade off.

• Some have argued in recent days that the two laws can be EXPANDED until the federal stimulus dollars run out and then we can just return to normal. That has some appeal, except it likely won’t happen. Here’s why. Federal guidelines inform states applying for these funds that their "applications should only be made under provisions of state laws that are currently in effect as permanent and not subject to discontinuation. This means that the provision is not subject to any condition – such as an expiration date, the balance in the state’s unemployment fund, or a legislative appropriation – that might prevent the provision from becoming effective, or that might suspend, discontinue, or nullify it." People will disagree over exactly what this all means, but while it’s being sorted out we need to just recognize that once benefit EXPANSIONS are enacted on a "permanent" basis in "good faith", the likelihood that they ever will be repealed is practically zero. If Congress had intended that the condition of distribution of these funds could be temporary and subject to discontinuation, it would have said so. It did not.

• Additionally, the effect of these two provisions, individually and cumulatively, is not well known at this time, but eventually they will increase Virginia’s taxes on jobs and employers and further deplete the state’s UI trust fund. We know now – for example - that even without these law changes, the state’s trust fund solvency level will dip to 38.5% this June and to 20% by June 2010, and by next year, Virginia will start borrowing money – lots of it - from the federal government to pay existing – not EXPANDED - benefits. We also know now that the average state tax on jobs – even without these law changes – will go from $98 per job this year to $159 per job next year and to $199 per job in 2012. These changes will not help this situation when the federal monies run out nor will it help now to create jobs.

• Some also argue that Virginia’s tax on jobs of $98 per year is too low - when compared to other states in the region – and we have room to "grow". North Carolina’s tax on jobs, for example, is $342 per year. South Carolina’s tax on jobs is $148 per year. They may even offer better benefits. And they’re already borrowing from the federal government to pay current benefits – not EXPANDED benefits. By February, for example, North Carolina had borrowed over $60 million; South Carolina almost $133 million. Virginia has borrowed nothing – yet - but that will change next year.

• A better, business preferred solution that has been used in the past would have been a significant distribution of employer paid FUTA funds to state unemployment trust funds - with no federal strings attached - to bolster the solvency of state unemployment trust funds and to pay benefits to those currently out of work. This approach was suggested as the stimulus package was assembled – and rejected.

• We recognize that these are difficult times for all, but we need to remain focused and honor our fiscal commitment to those who are currently unemployed, even if that means we have to borrow money to do it. EXPANDING benefit debates can wait until another day, perhaps until January when we’ll have 60 days to discuss their impacts. We therefore urge you to reject the Governor’s amendments to SB 1495. Link here:

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