State handcuffed by budget as it works to assist jobless
ST. PAUL -- The Minnesota Legislature is looking for ways to help unemployed workers, a task made tougher given its own economic challenges.
As the ranks of out-of-work Minnesotans swell, legislators say more should be done to assist people without a paycheck.
"We're trying to do whatever we can to help people get through this downturn and get people back to work and get them back on the benefits they're used to," said Sen. David Tomassoni, DFL-Chisholm.
State officials have extended unemployment benefits, but legislators say additional help is needed.
Their efforts are limited by the state's budget crunch.
Legislators acknowledge a $4.6 billion deficit makes it difficult to fund new programs.
The state's unemployment rate reached 8.1 percent in February, and 13,300 jobs were shed during the month alone. The unemployment rate is projected to top 9 percent by the end of this year.
The state has not seen unemployment rates this high since the recession of the 1980s.
The spike in layoffs has translated into a similar increase in laid-off workers turning to the state for unemployment benefits. Nearly 150,000 Minnesotans collected state unemployment benefits in a recent week, another 32,000 receiving benefits granted through federal extensions.
Maximum state unemployment aid is $566 a week, plus a $25 federal supplement. An estimated 11 percent of benefit recipients collect the maximum amount.
Tomassoni, who leads an economic development committee, said the Legislature's most effective unemployment-related action may come in three areas, which require little or no general fund dollars.
A bill signed into law earlier this year extended unemployment benefits to Minnesotans who exhausted their state assistance but did not qualify for federal aid. That immediately helped nearly 3,000 Minnesotans, said Lee Nelson, legal affairs director for the Department of Employment and Economic Development's unemployment insurance program.
The agency also announced recently that additional unemployment benefits are available to out-of-work Minnesotans who have used up their regular state and federal benefits.
Tomassoni also pointed to a state-borrowing plan that funds public construction projects as critical to getting people back to work. The Senate already passed a borrowing plan -- known as a bonding bill -- that would pump $367 million into public building and infrastructure without putting a big dent in the state general fund.
"I quite frankly think we can't buy ourselves out of this recession and we have to work out way out and putting people to work is probably the best way to get this thing under control," Tomassoni said.
The House soon will advance a roughly $200 million public works bill, and Republican Gov. Tim Pawlenty has signaled support for a limited borrowing package.
Even if there is agreement on a bonding bill, it is not clear how many unemployed people would be put back to work or whether a public works package would prevent future layoffs, Nelson said.
Unemployed Minnesotans would benefit most from more job openings.
"The best thing to do is create jobs," Nelson said. But he added: "How do you do that?"
There is agreement behind a third unemployment-related action: preparing to accept $132 million from the federal government for unemployment insurance benefits. The sooner that occurs, the more interest the state can collect on those funds, Tomassoni said.
Other legislation is aimed at providing new, temporary health insurance options for laid-off workers.
An increase in the number of Minnesotans without health insurance will drive health care costs higher, said Sen. Terri Bonoff, DFL-Minnetonka.
The proposal would open the state-subsidized MinnesotaCare health insurance program to laid-off workers who meet certain criteria.
It would be funded by taking 10 percent of the laid-off worker's unemployment check and by charging employers a fee. The companion House bill uses an entirely different funding source.
The Bonoff plan faces resistance because it is viewed by some as requiring a tax increase on businesses.
"The (Pawlenty) administration does have concerns with that," Nelson said.
Lawmakers also are considering a temporary extension of the five-year limit on welfare assistance.
Another proposal, sponsored by DFL Rep. Tom Rukavina of Virginia, would provide employers a wage subsidy. Employers then could pay workers more or hire more employees than they would without the assistance.
Rukavina's plan, which is called the Minnesota Emergency Employment Act, would be paid for with general tax dollars.
"That's the problem: it's funded through general funds," Nelson said. "There aren't any general funds."