Proposal missed the mark

Published 8:25 am Friday, May 1, 2009

When the Virginia General Assembly rejected Gov. Tim Kaine’s proposal to dramatically expand eligibility for unemployment benefits in a desperate grab for stimulus dollars, the outcry was swift — and from some quarters, more than a little disingenuous.

As legislators representing a region disproportionately affected by the present economic downturn, we understand the critical importance of funding unemployment insurance and job retraining programs to serve their proper purpose — helping struggling families get back on their feet. Unfortunately, the governor’s proposal missed the mark, as does his criticism in the wake of defeat.

To secure temporary federal assistance through the stimulus package, Gov. Kaine sought permanent, and costly, changes to Virginia’s successful unemployment insurance model. For nearly 15 years, Virginia has been a leader in transitioning the unemployed and displaced back into the workplace. No program is without flaws, but by most standards, Virginia’s has been a model of efficiency and success.

The current economic crisis poses new challenges, but we cannot rise to meet those challenges by going further into debt with little to show for it.

House and Senate Republicans worked to ensure that those who lose their jobs in the present economy do not fall through the cracks. We passed Del. Sam Nixon’s legislation postponing a scheduled increase in earning requirements to collect unemployment benefits, extended eligibility for unemployment compensation from 26 to 59 weeks, backed a $25 increase in weekly benefits, and supported proposals to increase funding for job retraining.

More than $450 million in new unemployment insurance assistance from the federal government is in the pipeline, including $62.5 million in federal stimulus dollars. To collect a further $125 million one-time payout, however, Gov. Kaine endorsed a proposal to make part-time workers eligible for unemployment benefits — even if they have no intention of seeking full-time employment.

For rejecting this boondoggle, partisans accuse us of abandoning the unemployed. Nothing of the kind. We have demonstrated our strong support for meaningful efforts to assist those in need. What we cannot support is an expensive and unnecessary expansion of the definition of unemployed that will cost Virginia taxpayers as much as $60 million per year once the stimulus money runs out, which will likely occur in less than two years’ time.

The brunt of this added expense would be borne by small businesses, the very engines of job creation we should seek to unleash in these difficult times. By accepting a one-time federal handout, the governor would commit Virginia to new expenses in perpetuity. Accepting the money is a Faustian bargain so costly that even one Democratic governor admitted, “I’m not sure that we can, over the long run, cope with the high unemployment compensation standard that this mandates for states.”

Being asked to make a permanent change to draw down temporary dollars puts Virginia’s employers on the hook when the federal stimulus money dries up in two short years. While the governor has noted Virginia’s low average tax per employee — something that has given us a competitive advantage to attract businesses in the first place — he fails to mention that smaller businesses pay a higher rate, upwards of $400 per employee. Virginia should not be creating a disincentive for small businesses to retain and create the new jobs that will help turn our economy around.

In times of economic distress, government can play an important role in helping those who find themselves out of a job. Ultimately, though, neither Richmond nor Washington can revitalize the economy, and the best unemployment program is, and will always remain, growth in private sector employment opportunities.

The governor’s proposal would have stifled the very engines of economic recovery and charted a course for even greater debt. In rejecting this failed approach, we struck a blow for job creation, for turning our economy around. We cannot, as legislators, breathe new life into the economy, but we know better than to stand in the way.

We are proud of our records on job creation and unemployment insurance, and believe that the path we have taken offers the right prescription to help those who need a hand up — and, ultimately, to position Virginia on the path to economic recovery.