Updated: House votes 98-0 on UI deal for business, labor

The OlympianFebruary 9, 2011 

The state House of Representatives swiftly and unanimously voted today to approve an unemployment insurance deal that came after days of negotiating on a sharply contentious issue.

If ratified by the Senate Friday and signed by the governor, it extends benefits for thousands of unemployed workers by $25 per week – until money runs out, possibly in November; and it cuts $300 million from rates businesses pay into the UI system.

All 98 House members voted for House Bill 1091 which goes to the Senate for a final vote Friday. The measure reduces tax rates paid by an estimated 90 percent of businesses and is permanent. Businesses had been looking at rates rising by as much as 36 percent this year, depending on category.

The bill seeks to smooth the overall hit businesses take as jobless benefits paid over the past year now cause individual businesses' rates to rise. The bipartisan vote was in contrast to earlier squabbles.

The vote also came a day later than Gov. Chris Gregoire's deadline for passing a relief measure for businesses. Gregoire spokeswoman Karina Shagren said it was not yet clear when the Democratic governor could sign either measure.

But she said the governor's staff believes there is time for the Employment Security Department to implement the new rates before new UI taxes are due. UI taxes are paid quarterly.

UPDATE: Gregoire's office put out a statement embracing the agreements. [Her full statement is at bottom of post.]

As a precaution, the House sent Gregoire a second bill, SB 5135, that temporarily reduces businesses’ pending UI rate hikes by $300 million over the year. That is so the governor can sign a measure immediately that lets Employment Security begin changing its computer systems for the rate change. SB 5135 also passed the House unanimously today and cleared the Senate last week with only one no vote (Sen. Sharon Nelson, D-Maury Island).

Both sides in the House hailed the compromise as a good bipartisan solution. "This is an unusual economy. This is an unusual session. We have agreement on a UI bill," Republican Rep. Cary Condotta of Wenatchee said during debate on an amendment made today to the House’s replacement language for HB 1091.

And Republican Rep. Judy Warnick of Moses Lake said it shows the state is looking at its competitiveness by adjusting its burden on businesses and also sending a message to businesses that might relocate to Washington or expand here.

Democratic Reps. Mike Sells of Everett said it makes use of the well-funded system to help business and the jobless in an economic downturn that was not the state’s fault.

Republican Sen. Janea Holmquist Newbry of Moses Lake said she supports the deal and expects support in her caucus. She had told DeBolt before the vote that “we’re not in love with it but we agree it’s what we need to do now.”

She later called it evidence of a philosophical majority moving toward a rational agreement.

Sen. Jeanne Kohl-Welles, D-Seattle, said the House leaders and negotiators "did a brilliant job" and confirmed a floor vote is set for Friday "unless something changes."

Kohl-Welles chairs the Senate's labor committee and praised work by Speaker Frank Chopp, D-Seattle, Republican Leader Richard DeBolt of Chehalis, lawmakers on both sides of the aisle including Reps. Sells and Condotta, who had represented the labor and business committees in a productive "four corners" negotiation on Tuesday.

"We really agreed on the concepts and it was just a matter of determining what the final numbers would be. So it's really a big relief," Kohl-Welles said.

DeBolt said Republicans balked at spending more than $60 million on extra benefits for the jobless, while Democrats wanted $86 million using federal Reed Act monies (which can be used for training, benefits or system upgrades such as computers). They compromised this morning at $68 million, meaning the extra weekly benefit of $25 will run out whenever the $68 million is exhausted – likely in November.

And it leaves $30 million for other potential costs, which the GOP wanted, according to Condotta.

The deal ends an effort by labor to give increased jobless benefits temporarily to families with dependent children. Chopp had said computers could not be reprogrammed soon enough and costs were high. The deal also includes an expansion in training assistance for laid-off workers that is worth about $19 million to $20 million a year.

Condotta said retraining costs won’t be a big impact on the UI trust fund, because calculations show there will be a 14-month reserve left in the system even after the employer and jobless rate changes in HB 1091. The reserves would have to dip lower than anyone can foresee before higher surcharges on businesses would kick in to re-inflate the fund, Condotta said.

Condotta also said the rate adjustments for businesses are not really a tax cut. He said it is more like a reduction in withholding – he compared it to the federal payroll-tax reduction this year – that eventually will have to be repaid by participating businesses.

DeBolt said Republicans had found 10 Democrats willing to sign their caucus amendment to HB 1091 that would have capped the cost at $60 million for the $25 per week temporary benefit. He said Democrats became more willing to negotiate the final after the Republicans told Democratic leadership.

House Majority Leader Pat Sullivan, D-Covington, said that wasn't the case. He said leadership hadn’t explained well enough to caucus members that a new negotiation was under way that accommodated GOP concerns, so some Democrats who signed the Republican alternative had thought it was the only one.

So that did not create leverage to negotiate and all parties had been negotiating well for days.

"I swear every couple of hours there was another idea, another option … Even this morning we didn't have an amendment on the bar yet," Sullivan explained, adding that Republicans were definitely a part of that final agreement. "Cary was extraordinary in his efforts."

UPDATED: Gregoire's full statement:

"When the session began, I asked the Legislature to act with urgency and a bi-partisan spirit to help get our economy moving, create jobs and give relief to unemployed workers. Thanks to the quick action of the Legislature, more than 80,000 small businesses will pay lower tax rates and be able to reinvest in their employees and spur hiring. More than 70,000 unemployed workers will also receive an extension of unemployment benefits as they continue to look for work and stretch to make ends meet. "Today's action, along with House Bill 1091, provides a package that helps support jobs and our economy at all levels. In addition to a short-term temporary increase in unemployment benefits, this bi-partisan solution expands re-training benefits for people whose jobs are gone for good. Worker re-training is a critical investment in our future. I encourage the Senate to pass HB 1091 quickly."

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