DES MOINES -- Members of a Senate committee clashed Thursday over legislation that would delay and reduce government benefits paid to unemployed Iowans — with backers saying the changes would still keep Iowa’s program among the nation’s most generous while critics called them “cruel” and ill-timed during a pandemic that’s idled many workers.
Senators on the Labor and Business Relations Committee voted 6-4 along party lines to forward to the chamber’s debate calendar Senate Study Bill 1172, a bill that proposes to require workers to wait a week after losing their job to receive unemployment benefits.
The bill also would reduce the amount paid to workers with multiple dependents and cut worker benefits from an extended 39 weeks to 26 weeks if a business closes.
The measure would take effect in July 2022 to give Iowa Workforce Development time to make the mandated changes.
Sen. Jason Schultz, R-Schleswig, said the revisions are intended to keep Iowa’s unemployment insurance trust fund predictable and sustainable for employers who pay into it while maintaining a fair system with “generous” benefits for idled workers.
“Compared to the other states, we have about the greatest generous unemployment system,” Schultz said during Thursday’s committee discussion, during which it was noted neighboring states and all but eight other states have a one-week waiting period before a worker receives unemployment benefits.
“We are at the absolute top,” Schultz said. “After this bill, despite what you heard, we are still at the top.”
Democrats tried unsuccessfully to offer “common-sense” amendments to try to exempt from state income tax the jobless benefits paid to an estimated 740,000 affected Iowans who lost their employment temporarily or permanently due to the pandemic — similar to the way federal stimulus checks and federal Paycheck Protection Program loans to businesses were shielded from taxation.
“We’re going to kick people when they’re down on their luck in this state. We’re going to tell them they’re going to be taxed on their pandemic unemployment benefits? Really,” said Sen. Pam Jochum, D-Dubuque. “Quite frankly, this bill is cruel, cruel, and we should be ashamed that we’re even spending time debating it today.”
In urging a no vote on the amendment, Schultz said forgiving the state tax liability on jobless benefits would have “a substantial impact” on the fiscal 2022 state budget plan being formulated.
But Sen. Nate Boulton, D-Des Moines, who offered the amendment, accused majority Republicans of using “a very selective view” in crafting and implementing tax policy. “We’re saying we’re going to solve our budget woes this year by making sure Iowans who received these pandemic benefits get taxed for it.”
“The restrictions have been lifted in Iowa, our unemployment is back down near 3 percent,” Schultz said. “We are out of the pandemic. There are people who are troubled, who are sick, we are still seeing the effects, but the unemployment environment has moved back to near where we were pre-pandemic.”
Sen. Bill Dotzler, D-Waterloo, said he hoped that was true but wasn’t ready to embrace that position “that everything is going to be peachy” or make system changes that penalize jobless Iowans with larger families by reducing or limiting payments that would benefit them and the communities where they spend their money.
“This isn’t about conservatism,” Dotzler said in berating Republicans who, he said, used to be willing to leave the unemployment benefits system alone. “This is about hurting people’s lives and hurting the communities that they work in.”
Republicans and business organizations backing the bill have said the cuts — which Boulton placed at $30 million — are necessary to preserve the state’s unemployment trust fund, which the state taps to pay workers’ weekly benefits.
Businesses support the fund with employment taxes, set at a rate that rises or falls, depending on how much money is in the fund.
Iowa’s trust fund had about $940 million in it at the start of February, an amount that was down from $1.2 billion a year ago but that was bolstered by $499 million that Gov. Kim Reynolds used in federal CARES Act money to solidify the trust fund.
“We’re not on the brink of some unemployment trust fund crisis, we’re not on the brink of dramatic increases of unemployment taxes,” Boulton said. “It’s for the public good that these benefits exist. This is bad legislation.”