MacIver News Service | July 9, 2013[Madison, Wisc…] Wisconsin’s Unemployment Insurance (UI) received many reforms to reduce abuse and improve its fiscal solvency this week as Governor Scott Walker signed Act 36 into law after vetoing some provisions. The reforms, co-sponsored by Senator Frank Lasee (R-De Pere) and Representative Dan Knodl (R-Germantown), are expected to save $11.5 million annually while increasing benefits and fixing a number of loopholes and flaws previously present in the system.
Representative Knodl applauded the signing of the law, saying that “the passage of [Act 36] along with the changes in the budget move Wisconsin light years forward when it comes to unemployment insurance reform.”
Under previous law, workers could quit for 18 various reasons and still collect UI benefits. Many of these exceptions were eliminated. The new law also shifts UI tax increases away from employers, increases job search requirements, prohibits double-claiming from the federal government, and requires random audits of claimants. The Unemployment Insurance Advisory Council, an advisory committee composed of five labor and five management representatives, has approved all these reforms.
The UI system had been troubled for years before this law was passed. UI benefits are paid out of the Unemployment Reserve Fund. When that fund was emptied in 2009, the Wisconsin state government borrowed $1.6 billion from the federal government, a loan that at one point cost $60,000 per day in interest payments. UI taxes on businesses have roughly doubled since the state took that loan in order to pay that interest, but the new law reduces their UI taxes to pre-loan levels by shifting the fiscal burden for the interest payments to the general budget.
Governor Walker issued a partial veto of one section of the law that would have allowed the Department of Workforce Development to revoke certain state licenses for delinquency in UI taxes. Governor Walker said that the provisions were “unnecessarily broad.” Representative Knodl stated that he had no concerns over the Governor’s veto.