No fix this year for troubled unemployment system

COLUMBUS - Ohio lawmakers won't overhaul the state's troubled unemployment system – at least not until April, they say.

After days of furious negotiating, lawmakers, business and union leaders came up short of a comprehensive fix that would please both the people who receive unemployment benefits and the employers who pay for them. Instead, lawmakers said Tuesday, they plan to freeze unemployment benefits for 2018 and 2019. Employers currently pay taxes on their employees' annual wages up to $9,000, and lawmakers plan to increase that to $9,500. The national average is $13,407.

Both measures will do little to shore up the state's unemployment fund, which could be drained again by 2025 without a recession or 2019 with a moderate one.

But the concessions show a good-faith effort from business and labor leaders to get something done, said Speaker Cliff Rosenberger, R-Clarksville. Lawmakers will need that good faith if they want to announce a true reform package by Rosenberger's announced deadline of April 1, which is not binding under law.

"This stop gap isn't going to bring us any closer to solvency than we are now," Rosenberger said. "The premise is both sides are giving a little. In negotiations, that's what you have to do."

Lawmakers must rebuild the pot of money the state uses to pay unemployment benefits to people who lose their jobs due to no fault of their own. If not, Ohio business owners could face penalty taxes like the ones they paid following the last recession. In January 2009, Ohio's unemployment compensation fund went broke.

So, Ohio – like 35 other states – borrowed money from the federal government. Ohio borrowed nearly $3.4 billion between 2009 and 2014, and had to pay interest on that loan to the tune of $257.7 million. While the state repaid that money, employers were penalized with higher taxes until earlier this year, when the debt was repaid.

Long-term unemployment still a drag on economy

Everyone wants to avoid that situation, but Republican lawmakers' proposed solutions, such as axing the number of weeks individuals would receive unemployment benefits, were met with staunch opposition. A proposal to reduce money paid for the spouse and children of a recipient was also unpopular.

"That great recession just devastated us. We haven’t recovered fully from that," said Eric Burkland, president of the Ohio Manufacturers' Association. "This system, we rely on it. We need it to be solvent. Unfortunately, we’re one of the worst systems in the country."

Business and labor leaders said Tuesday they agreed to split the cost of an actuary to analyze proposals to fix the fund.

Democrats, who hold super minorities in the Ohio Legislature, backed their Republican counterparts' decision to put reform on hold.

"Fairness and balance can only happen when working people and businesses are represented at the same table with an equal voice," said House Minority Leader Fred Strahorn, D-Dayton, in a statement. "The same families and working people who find themselves out of work due to market and corporate forces should not shoulder a disproportionate share of sacrifice and pain to fix our bankrupt unemployment fund.”