Letter -Governor wrong to veto unemployment compensation reform

To the editor:

I am writing in response to Governor Holden's recent veto of Senate Bill 2, unemployment compensation reform. As most already know, the unemployment trust fund became bankrupt in March of this year. Senate Bill 2 was an attempt to avoid hundreds of millions of dollars in lost tax revenue and to make the program more responsive to economic downturns.

The unemployment fund has showed considerable stability through economic cycles over the last 30 years. The recent downturn was more dramatic in Missouri than most have been, and exposed shortcomings within the program.

Most notable among the shortcomings were tens of millions of dollars in benefits paid to people who did not qualify and benefit payments in situations where nearly every other state didn't compensate.

Missouri has been lucky in that for a number of years our tax revenues were sufficient to support programs which went well beyond what other states provide. We are now experiencing the pain of that generosity. The Legislature took a long hard look and crafted a remedy. Senate Bill 2 balanced accelerated payments by employers with benefit limitations already in place in most other states. The result was $2 in accelerated employer payments for every $1 in benefit limitations.

Apparently this governor is not satisfied that Missouri employers were stepping up to fix another fiscal problem realized during the Holden administration. While Governor Holden has been completely absent during any debate on the unemployment program, he now cites four concerns in his veto message:

Point 1 - "This bill fails to remedy the insolvency?" Missouri's benefit structure permits illegal drug users and others fired for misconduct to collect unemployment benefits. Forty-seven other states do not pay benefits when someone is fired for misconduct, including the use of illegal drugs.

The state Department of Labor projected during the session that Senate Bill 2 would save the state $51.7 million of tax money annually and the program would be solvent with all loans repaid within three years.

It appears the governor doesn't trust the projections of his own administration. How long will the program be insolvent now that Governor Holden vetoed the only solution put forward? Missouri's laws relating to misconduct in the workplace are the weakest in the nation. As an illegal drug user fired from their job, a person can be assured they will receive unemployment checks for 26 weeks.

In 2002, Missouri paid as much as $5 million in cash benefits to people using illegal drugs. Is vetoing program reforms which deny cash benefits to illegal drug users, and bring Missouri's unemployment benefits in line with 47 other states this governor's idea of a remedy?

Point 2 - The governor stated the legislation didn't make any of the common sense reforms needed. I am sure he isn't referring to the common sense reform in Senate Bill 2 which would have prevented elected officials from collecting unemployment in addition to receiving a salary for being an elected official. Or the provision which would have denied money to illegal drug users.

Point 3 - "The bill would actually jeopardize the state's AAA bond rating and facilitate continued unemployment security deficits." If reforms, saving more than $51 million annually, facilitate continued deficits, what does obstructing reforms by vetoing the bill do? And, if the governor had been involved during debate on the bill, he would have known all three of the primary bond rating agencies issued a statement to the contrary. Each said bonds issued pursuant to Senate Bill 2 would not affect the state's bond rating.

And finally we come to the crux of the governor's objections.

Point 4 - "Indeed, this bill is likely to prevent any increase in unemployment benefits before the year 2009." Who, besides our former state treasurer and current governor, would suggest a good reason not to reform a bankrupt program is because we can't increase benefits until after the program is solvent? How will increasing benefits remedy the insolvency the governor is so worried about?

As we approach the 2004 election, Missouri businesses can refer to line 8 of their Quarterly Contribution/Wage Report to see how much the "Governor Holden Line 8 Tax" is costing their business. Associated Industries of Missouri will be sure to keep track of how much the new Holden tax is costing all Missouri employers.

Jim Kistler

Vice President and Director of Industrial Relations

Associated Industries of Missouri

Jefferson City