HOUSE BILL NO. 142 "An Act relating to unemployment insurance benefits; increasing the maximum weekly unemployment insurance benefit rate; and providing for an effective date." 1:34:44 PM Co-Chair Foster reported that the bill was last heard on February 2, 2018 at which time the committee took public testimony. There was one amendment that would be offered for the bill. He invited testifiers to the table. KENDRA, KLOSTER, STAFF, REPRESENTATIVE CHRIS TUCK, relayed Representative Tuck's apologies for not being present. He was chairing another committee currently. She was available for questions. Representative Wilson understood the amounts were being changed to be closer to the fiftieth percentile. She wondered why the scale stopped at $59,500. PATSY WESCOTT, CHIEF OF UNEMPLOYMENT INSURANCE, DIVISION OF EMPLOYMENT AND TRAINING SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, explained that the current scale determined the amount at which the department stopped. The scale increased the benefit in $2 increments, and it increased the qualifying base period wages in $250 increments. The department stopped the scale when it reached $510, approximately 50 percent of the state's average weekly wage. Representative Wilson asked about the indeterminate fiscal note. The estimated cost difference, had it been done in 2017, was $456,600. In order to determine the state's share of increase, she wondered if she would calculate 76 percent of $456,600. Ms. Wescott responded that the fiscal note was prepared by the Office of Management and Budget (OMB). She thought it would be better to have a representative from OMB speak to the fiscal note. 1:37:29 PM CAROLINE SCHULTZ, POLICY ANALYST, OFFICE OF MANAGEMENT AND BUDGET, introduced herself and asked Representative Wilson to repeat her question. Representative Wilson relayed that the fiscal note was indeterminate because the state did not know what the wages would be or who would qualify. She supposed it was merely an estimate. Again, she referred to the cost difference of $456,600. She asked for clarification about the calculation. Ms. Schultz responded that the state paid for state employee unemployment insurance (UI) claims by associating a rate with every state employee. The unemployment insurance rate was .4 percent which went into the working reserve account. The state paid out terminal leave cash-ins and UI claims from the terminal leave account. The fund was underwritten by the .4 percent which came from personal services. She explained that about 50 percent of personal services costs were undesignated general funds (UGF), 36 percent were designated general funds (DGF), and the other 14 percent were federal funds. She continued that of $456,600, about $228,000 was UGF, $164,000 was DGF and other, and $64,000 were federal funds. Representative Wilson asked her to restate her answer. Ms. Schultz repeated the figures. Representative Wilson appreciated the information. Representative Grenn asked when the weekly benefit had been increased last. Ms. Wescott responded effective January 1, 2009. Representative Grenn asked if there had been automatic adjustments every year. Ms. Wescott responded that the second portion of the bill would allow for automatic increases moving forward. Representative Grenn referred to a note he had from the previous year that 36 states had automatic adjustments. He wondered if that number had changed. Ms. Wescott responded that the number was still 36. Vice-Chair Gara understood why the fiscal note was indeterminate and was okay with leaving it that way. However, he thought there might be a problem at the end of the year because of no budget money being allocated for what the state knew would be approximately $228,000 of UGF. He suggested there would be a $230,000 cost at the end of the year. Co-Chair Foster indicated that the one amendment being offered was brought to the committee by the bill sponsor. 1:42:17 PM Co-Chair Foster MOVED to ADOPT Amendment 1 (copy on file): Page 9, line 13: Delete "2019" Insert "2020" Page 9, line 28: Delete "2018" Insert "2019" Co-Chair Foster reviewed the amendment. There being NO OBJECTION, Amendment 1 was ADOPTED. Co-Chair Seaton was not comfortable with the indeterminate fiscal note. Fiscal notes were combined into the budget as appropriations. Without an amount, no money would be appropriated for the bill if it were to pass. He was unsure how to handle the matter. Co-Chair Foster would take an at ease after Vice-Chair Gara reviewed the fiscal note. Vice-Chair Gara reported that HB 142, version U, had 2 fiscal notes. The first was a zero fiscal note by the Department of Labor and Workforce Development (DLWD). The appropriation was unemployment and training services and the allocation was unemployment insurance. The OMB component number was 2276. The second fiscal note was the indeterminate fiscal note by OMB that had just been discussed. It reached across all of the departments in the state and had an OMB component number of 0. Co-Chair Foster invited Kelly Cunningham from the Legislative Finance Division (LFD) to the table. 1:46:05 PM KELLY CUNNINGHAM, ANALYST, LEGISLATIVE FINANCE DIVISION, responded that because increasing the UI benefits would touch all allocations, she did not believe there was a way to generate a fiscal note that would represent every allocation in the state. The Legislative Finance Division worked with OMB and DLWD on the fiscal note and concluded that it made sense to use "various" and for the note to be indeterminate as long as an amount was included in the analysis. Vice-Chair Gara asked if the normal course would be to add the funds as a statewide appropriation when the budget was reconciled at the end of the year. Ms. Cunningham replied that there would not be an appropriation in the operating bill. The costs would not be seen, as they would be spread throughout the agencies and rolled in with all of the other benefits that went into salary adjustment increases in the following year. Vice-Chair Gara was comfortable with the bill and would support it. However, he did not want the state to lose 2 employees because of the lack of a fiscal note. Ms. Cunningham noted that there would not be a loss of 2 employees within DLWD because the cost would be spread throughout the state agencies. Co-Chair Foster asked Ms. Cunningham to repeat her response, as Co-Chair Seaton did not hear her answer. Ms. Cunningham explained that because the increase in the UI benefits would touch all allocations throughout the state, there would not be an efficient way of generating a fiscal note. The "various" indeterminate note made sense as long as the estimated amount was in the analysis. Representative Wilson asked when the bill would take effect. Ms. Cunningham replied it would take effect in January 2019. It would impact half of the FY 19 budget. The estimated amount for FY 19 would be $115,000, and it would be $230,000 in the out years starting in FY 20. She noted it would be automatic. Representative Guttenberg wanted reassurance that the indeterminate fiscal note would not end up as a negative in the budget. Ms. Cunningham understood that the costs would get rolled in after the fact. Representative Guttenberg clarified that the cost would be added rather than subtracted after the fact. Ms. Cunningham responded, "That is correct." Co-Chair Seaton confirmed that the legislature had the ability to do a fiscal note in conference committee if necessary. He was comfortable moving the bill. Co-Chair Seaton MOVED to report CSHB 142 (FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 142 (FIN) was REPORTED out of committee with a "do pass" recommendation and with a new zero fiscal note by DLWD and with a new indeterminate fiscal note by the Office of the Governor. 1:52:25 PM AT EASE 1:56:25 PM RECONVENED