Legislature(1995 - 1996)
1996-02-09 Senate Journal
Full Journal pdf1996-02-09 Senate Journal Page 2350 SB 276 SENATE BILL NO. 276 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: An Act relating to the calculation of unemployment insurance benefits; and providing for an effective date. was read the first time and referred to the Labor and Commerce and Finance Committees. Fiscal note published today from Department of Labor. Governors transmittal letter dated February 9: Dear President Pearce: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill increasing unemployment insurance benefits. For years the unemployment insurance system has enabled Alaska workers, their families, and their communities to weather periods of unemployment with their economic well-being and dignity intact. Recent events in Sitka and Wrangell, as well as in other areas of the state affected by plant closures or layoffs, have demonstrated all too well the importance of this safety net for our working men and women. The schedule of benefits for unemployment insurance has not been adjusted to increase the maximum weekly benefit amount since 1990. Alaska currently ranks 49th in the nation in unemployment insurance wage replacement, with the average weekly benefit amount only slightly more than 27 percent of the average weekly wage for the state. In terms of the maximum weekly benefit amount, Alaska ranks 35th in the nation, notwithstanding the higher cost of living here. 1996-02-09 Senate Journal Page 2351 SB 276 The current benefit schedule uses a workers yearly wage to determine the weekly benefit amount. The minimum qualifying wage amount is $1,000, which provides a weekly unemployment insurance benefit amount of $44. For each $250 a worker earns over $1,000, two dollars is added to the benefit amount. Weekly benefits are now capped at $212 based on maximum wages of $22,250. This bill would keep the current benefit schedule in place but would replace the current fixed cap with a flexible cap. The new cap on wages would be 75 percent of the average annual Alaska wage, exactly the same as the wage base on which employers and workers are taxed to support the system. Bringing the maximum qualifying wages up to the wage base would raise the maximum benefit amount from $212 to $238 in 1997. The average cost to employers in the year 2000 will be approximately one dollar per employee per week. Thirty-five states use a flexible benefits standard driven by changes in the average weekly wage. The advantage of such a system is that it integrates the benefit standard into the self-adjusting unemployment trust fund formula, which is directly tied to the performance of the state's economy. As average wages rise, the standard for unemployment insurance benefits keeps pace in terms of income replacement. If wages fall, as they did during the 1986-1987 recession, the maximum weekly benefit decreases, and the employer tax burden decreases. I want to emphasize that this is a modest proposal. The bill would raise Alaskas wage replacement less than one percent. While not enough to change our wage replacement ranging among the states, this small change would provide a measure of additional security to Alaskas average wage earners and help slow the erosion of purchasing power during hard times. As we work together to strengthen Alaska's economy to provide quality jobs for Alaska's families and to move certain low-income people from welfare to work, we must ensure that there is an adequate safety net in place to allow unemployed workers sufficient finances to remain in their homes, in their communities, and in Alaska until they are reemployed. 1996-02-09 Senate Journal Page 2352 SB 276 I urge your support of this important legislation as a matter of fairness and equity for Alaska workers and businesses. Sincerely, /s/ Tony Knowles Governor