LINCOLN - Nebraska is reversing course and going after a last bit of federal stimulus money after all.
State senators gave 37-0 first-round approval Thursday for a plan to qualify the state for $43.6 million in stimulus funds to shore up its recession-battered unemployment insurance fund.
The vote came after a compromise was struck between the state’s major business and labor groups, and a year after the state’s business community and Gov. Dave Heineman voiced strong objection to seeking the money.
New interest in seeking the money arose after Nebraska companies were socked this year with an average 165 percent increase in their rates for unemployment insurance.
That prompted negotiations, which resulted in a deal last week that balances some unemployment benefit improvements required by the $7 billion Unemployment Insurance Modernization Act of 2009 with some cuts in benefits.
The plan qualifies Nebraska for the $43.6 million without sticking state businesses with a long-term increase in unemployment insurance costs, said Omaha Sen. Steve Lathrop, who brokered the deal.
“What we do is a benefit to the business community and wage earners,” Lathrop said.
He and other officials said the influx of money would help stabilize the state’s fund. It is not expected to prompt a decrease in rates; officials said it is more likely to help soften another increase.
Heineman remained noncommittal about whether he would sign the measure, Legislative Bill 1020.
He is doing his own evaluation of whether the deal indeed will avoid a long-term increase in unemployment insurance rates for businesses, spokeswoman Jen Rae Hein said.
That evaluation, Hein said, would be in addition to one already done by the State Department of Labor, whose analysis was used by business and labor organizations to bless the deal.
Opposition by Heineman would seem unlikely barring the discovery of some analytical error because all the major business organizations in the state support and helped craft the compromise. That includes the state chamber of commerce, the Omaha and Lincoln chambers of commerce, and the National Federation of Independent Business.
The AFL-CIO and the Nebraska Appleseed Center, which represented workers in the negotiations, also supported the compromise.
The unemployment portion of the federal stimulus program drew the most controversy when it was unveiled last year, mostly because of the strings attached in qualifying. But now Nebraska is among only 16 states that have not sought the money. Neighboring Iowa, for instance, has already received $70 million.
The recession has caused a crisis in some states, as unprecedented unemployment has drained the trust funds that finance their unemployment benefits.
Nebraska’s fund has fallen from a high of $283 million in August 2008 to $124 million in March.
The drawdown forced the big increase in unemployment insurance rates paid by companies and a wave of complaints to senators.
To qualify for the stimulus money, LB 1020 would extend benefits for unemployed workers involved in training programs for high-demand jobs. Low-wage workers also would have a second way to qualify for unemployment checks, possibly increasing the number who qualify.
The training component was attractive to both business and labor groups.
To offset the $14.9 million cost of doing that and to head off a long-term rate increase for business, unemployment benefits would be reduced by $15.7 million.
The bulk of the savings would come from extending, by a week or two, the penalties for voluntarily quitting a job or being fired for misconduct.
For instance, employees dismissed for “ordinary” misconduct things less serious than stealing would have to wait 14 weeks before being eligible for unemployment checks, rather than the current 12 weeks. Such employees would be eligible for only 12 weeks of checks under LB 1020, since regular unemployment benefits extend for only 26 weeks.
Ron Sedlacek of the state chamber said the extension of such penalties puts Nebraska more in line with other states.
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