The debate over how to replenish Wisconsin’s unemployment budget will grow more pointed if the federal government grants a state request to extend benefits for 99 weeks.
But matters of debt, even if the debt grows beyond the state’s $1.1 billion unemployment budget deficit, need to take a back seat to the specter of 100,000 Wisconsin residents ready to lose their unemployment checks at the end of February, said state Rep. Kim Hixson, D-Whitewater.
“This situation is different than anything we’ve seen in the past,” he said. “We need to get money to the people that need it right now, and (a federal extension) is the quickest way we can get that money and make it happen.”
Hixson is one of 30 lawmakers who sent a letter to Wisconsin’s congressional delegation asking for the extension in federal unemployment benefits to help those who will lose their benefits at the end of the month and those whose benefits will expire later this year.
Under Wisconsin’s unemployment program, registered unemployed workers receive weekly checks from the state for 26 weeks, said James Buchen, vice president of government relations for Wisconsin Manufacturers & Commerce and a member of the state’s Unemployment Insurance Advisory Council.
The federal government, he said, began granting extensions last year during peak unemployment times and after Wisconsin’s unemployment budget ran out in February 2009.
But state Rep. Mark Honadel, R-South Milwaukee, said he doesn’t want a federal extension and is nervous about the amount of debt already accrued.
“We borrowed about $1 billion in 2009, and we’re scheduled to borrow about another billion in 2010,” he said. “We need to fix this at the state level.”
But if Congress grants Wisconsin the 99-week extension, Buchen said, it would be through a federal stimulus program the state is not obligated to repay.
However, if the state does not find a way to generate new money for its unemployment budget, it will have to ask for more federal assistance and increase the debt, Buchen said.
Wisconsin is one of 27 states borrowing federal money to sustain its unemployment budget, said Hal Bergan, administrator for the state Department of Workforce Development’s Unemployment Insurance Division.
Honadel said the state needs to stop leaning on the federal government.
“I appreciate the unemployment problem we have,” he said. “And I understand the system we have was put in place to keep families solvent. But at what point does it become entitlement versus a stopgap? Are we just creating a federal welfare program?”
One way to get money back into the state’s unemployment budget, Honadel said, is to adopt a one-week lapse in unemployment payments that would prevent workers from collecting benefits until they are without a job for at least five days.
Right now, Honadel said, workers can be laid off on a Friday and start collecting unemployment the following Monday, meaning they can collect a state check as well as their final payroll check the following week. They also can collect unemployment for temporary layoffs, he said, such as when employers close offices for two or three days during deer hunting season.
Not only do workers do that, Buchen said, but the beginning of deer hunting season often accounts for the largest increase in unemployment during the year.
“If we put in the one-week lapse,” he said, “we figure we can save anywhere from $50 (million) to $70 million a year.”
But that only goes so far, Buchen said, and making the state’s unemployment budget viable while also paying down the federal debt could take as long as five years.
In the meantime, if the federal help runs out, Wisconsin has no money for unemployment checks. Hixson said the state has a responsibility to ensure the federal lifeline is still there.
But the issue will get worse before it gets better, Honadel said.
“I don’t know the answer to this one,” he said. “I realize the checks stop if the federal money isn’t there, but how much further into debt are we going to push ourselves into?”
For workers still waiting for jobs, the checks mean survival, said Gail Hohlstein, a member of Carpenters Local 314 who has been laid off for more than three months. She said lawmakers need to worry about creating jobs.
“Collecting (unemployment) checks doesn’t do anything for a worker’s morale,” she said. “We’d rather get out there and work. I know there’s been a lot of talk about job creation, but I don’t think there’s been anything created yet.”