Illuzzi statement lays out reasons for fixing UI Trust Fund now

Vermont's Unemployment Insurance Trust Fund has been operating in a deficit since January. The federal government is lending the state money - at zero percent - since that time. Estimates are that before the economy recovers and the UI fund begins to recover on its own as fewer and fewer people file unemployment claims, the UI fund deficit could reach $300 million or more. While the federal government ensures that unemployment compensation is paid, there is also no guarantee that the federal government will continue to loan states money interest free.
Everyone in Montpelier agrees that the UI Trust Fund is in the red now because it was underfunded for many years when the economy was doing well. Once the recession hit, the fund was quickly drained. But not everyone agrees on how to fix the problem. There is some consensus that employers will have to pitch in more and that beneficiaries will have to receive less. But that notion is not universal. Given the difficult time legislators are having trying to balance the General Fund budget, they have had a difficult time also securing a solution to the UI fund deficit. State Senator Vince Illuzzi, chairman of the Economic Development, Housing & General Affairs Committee, is urging action this legislative session before the situation gets worse.
Statement Of Senator Vince Illuzzi
Unemployment Insurance Trust Fund
Press Conference
Thursday, April 15, 2010
One of the most important issues that must be resolved before the General Assembly adjourns is fixing the bankrupt Unemployment Insurance Trust Fund.
It’s a priority for the 23,800 employers who support the system. If we fail to act, Vermont employers will face additional and otherwise unnecessary penalty payroll taxes.
It’s a priority for all Vermonters who depend on state programs and services. If we as a state are forced by inaction to spend even more money to pay interest on the additional money we must borrow from the federal government, that means we will need to further cut state programs and services or raise taxes. Both options are unacceptable.
Every legislator and the Governor need to ensure that this issue is addressed this year in a meaningful and substantive way. We can’t afford to kick the can down the road for a second year in a row.
If the General Fund was expected to be in the red to the tune of $284 million, there would be alarm bells going off all over the place. A crisis mentality would set in. The same alarms should be going off with regarding to the UI trust fund.
Any time you have any state program expected to run almost $300 million in the red – in this case regarding a state program that is already bankrupt - it’s clear that immediate action is warranted on the part of all the key players. We have a crisis in the Unemployment Insurance Trust Fund.
The businesses that are represented by the organizations whose leaders are with me today are prepared to step up to the plate and do their part to fix the problem. They know that paying more now will avoid paying even more later.
My committee has made the first volley on this issue in the form of S. 290, a bill that is tough on everyone. Like any bill that is introduced, it’s a starting point with a few controversial provisions. There’s something in that bill for everyone to hate.
Since the time that this press conference was planned earlier this week, I understand a meeting is now scheduled between the Governor, the Speaker and the President Pro Tem. That’s positive news, and I hope the next step in moving this issue forward in a meaningful way toward a substantive resolution in the next few weeks.
Thank you.
Source: State Senator Illuzzi, R-Essex-Orleans.
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