Stimulus funds for jobless?

LINCOLN — Hill Brothers Transportation has weathered most of the storms dealt by the recession.

But a recent notice from the Nebraska Department of Labor came as a stunner.

It said the Omaha trucking firm’s unemployment insurance rates were doubling, and that it would cost Hill $45,000 more this year to help finance the state-managed fund that pays out unemployment benefits.

Nebraska businesses are feeling the sting of sharp increase in the rates, which rose by an average of 165 percent because of demand for unemployment benefits.

The demand also lowered the state’s unemployment insurance trust fund — from which benefits are paid — by nearly $100 million, to $171.5 million. The drop occurred between October 2008 and October 2009.

Complaints about higher unemployment insurance rates are prompting some officials to take another look at accepting a controversial portion of the federal stimulus package that would give Nebraska $43.6 million to soften the rate increases.

Twenty-two states, including Iowa, Kansas, Colorado and South Dakota, have accepted the funds through the federal Unemployment Insurance Modernization Act.

But when the idea was raised in Nebraska a year ago, Gov. Dave Heineman and the Nebraska Chamber of Commerce and Industry were emphatic in their opposition.

They said the strings attached in taking the money would cause a long-term increase in rates in exchange for a short-term benefit.

That was the same refrain voiced by a group of Republican governors from Texas to Alabama who also opposed the act.

But State Sen. Steve Lathrop of Omaha said complaints from businesses like Hill Brothers have prompted a change of attitude. He and Sen. Heath Mello of Omaha are leading the charge to find a way to accept the money.

“Business now sees that they need some help,” said Lathrop, chairman of the Legislature’s Business and Labor Committee. “There are a lot of people out there saying let’s do something.”

The key, he said, is finding a way to accept the $43.6 million without causing a long-term rate hike for business.

The Labor Department is scheduled to have calculations ready by today to determine whether a long-term rate hike can be avoided by trimming back some benefits already in state law, while also expanding some benefits required by the stimulus act.

Officials with both the AFL-CIO and the Nebraska Chamber of Commerce and Industry said their organizations have not agreed to anything but are eager to see if some compromise can be found.

Ron Sedlacek, who tracks the issue for the chamber, said his members had “no interest whatsoever” in accepting the stimulus funds as proposed last year.

But if there’s a way to juggle benefits to take the stimulus funds, he said, the chamber would be interested. Sedlacek added that the $43.6 million would only be a partial solution to the drawdown of the unemployment insurance fund.

Ken Mass, president of the AFL-CIO, said his organization has always supported accepting the stimulus funds, because they could expand benefits to the unemployed while, for instance, they are in job training programs.

But whether labor will accept a decrease in some benefits to take the stimulus money remains to be seen, he said.

“There’s a lot of things on the table right now,” Mass said.

To qualify for the federal stimulus funds, states must broaden who qualifies for unemployment benefits. States were given several options and some are already in Nebraska law, such as providing unemployment benefits to some part-time workers. That’s not done in all states.

Lathrop said he’s “reasonably confident” that the state can find a way to make the stimulus-required changes and trim some existing benefits in a way that won’t cause a long-term rate increase.

The Legislature would have to approve such a plan, which would also require the signature of the governor. Nebraska has until August 2011 to decide whether to accept the unemployment stimulus money.

Unemployment in Nebraska doubled between 2008 and 2009, to a high of 5.1 percent in June and July. That was the highest unemployment rate in 24 years. The rate was 4.7 percent in December.

State labor phone lines have been inundated with calls about unemployment benefits, prompting a number of complaints about delays and bolstering the number of workers who handle the calls.

But it wasn’t until December that businesses learned of the impact on their unemployment insurance rates.

Al Hill, one of three brothers who own Hill Brothers, said a doubling of his rates was hard to swallow when the trucking firm is facing higher costs for equipment and fuel.

Hill said he was struck by the irony of possibly having to lay off one or two workers to offset the $45,000 in additional unemployment insurance fees he’ll have to pay.

Ultimately, Hill said, he decided against layoffs, but the higher insurance rate will still affect his business.

As for taking the stimulus funds, he said he doesn’t have an opinion on that, but something needs to be done.

“We’re having to streamline everything in our operation,” Hill said.

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