HARRISBURG, Pa. (AP) — The state Senate has approved a bill to refinance the Pennsylvania unemployment compensation fund's $3 billion debt to the federal government — a move supporters say would save employers tens of millions of dollars over years.
The bill cleared the Senate on a 33-16 vote Tuesday, with three Democrats siding with the Republican majority. It next moves to the House for consideration.
The bill would authorize the Pennsylvania Economic Development Financing Agency to float bonds to pay off the federal loans the state used in recent years to help cover benefits to jobless Pennsylvanians.
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Interest on the state bonds is expected to be substantially lower than the 4 percent the federal government charges on the debt. The refinancing also allows the state to avoid the financial penalties that will kick start next year — and grow in future years — if the debt is not erased, said Sen. John Gordner, the Senate Labor and Industry chairman and the bill's sponsor.
If the bill becomes law, employers would save between $160 million to $265 million compared with what they would otherwise pay to the federal government, according to estimates from four unnamed financial institutions Gordner cited.
The legislation also would expand the wage base — the amount of wages on which employers pay an unemployment tax — from $8,000 to $10,000 over eight years, and offset that increase with a reduction over the same period in another element of the tax calculation. The changes are expected to keep employers' taxes "revenue neutral," said Gordner, R-Columbia.
Sen. Christine Tartaglione, D-Philadelphia, the ranking Democrat on the labor committee, unsuccessfully sought to amend the bill, which she said does nothing to help employees. A law approved in June will scale back some future jobless benefits.
"This scheme takes the burden from businesses and puts it on the backs of workers," she said. "It's exactly the type of lawmaking that has the working public up in arms."
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