Unemployment-fund reform

Even during this time of rock-bottom unemployment rates, Maine’s Unemployment Compensation Fund faces collapse because the years of patching and ignoring the fund’s revenue shortages can be ignored no longer. Further patching isn’t a good idea, either. Instead, the Legislature has an obligation to enact a broad reform to make the system solvent for the long term.

Maine’s Unemployment Insurance Program, funded by employer taxes, protects families in the event of job loss and supports businesses by allowing those families to pay their bills. The funding for the program, however, faces a $22 million shortfall next year that could grow to as much as $200 million over the next six years.

This problem exists largely because the fund collects taxes on only the first $7,000 of an employee’s income, a level set in 1983 and the lowest in the nation. The low level of collection is matched by low disbursements to families — the lowest in New England; 39 percent of the average weekly wage in Maine. For the last several years, lawmakers have prevented the fund from depleting entirely by inching up the contribution rate on the taxable wage, a device that hurts small business more than large ones and, clearly, not something that Maine could get away with doing forever.

The state Department of Labor proposed an overhaul recently that would, among other things, increase the taxable wage base to $12,000, establish contribution rates based on 20 experience categories, tighten rules against fraud and overpayment and reduce slightly the payments to the unemployed. What the department’s proposal does not do is expand the reasons for qualifying for the benefits — currently only four jobless workers in 10 get the benefits — and does nothing about the low rate of benefits except to make them even lower.

The Legislature, then, should view the department’s bill not as comprehensive but as a solid way to make the system stable. Already, lawmakers have eliminated bills that would have expanded access to benefits and increased reimbursement, signaling that they are interested this session in merely saving the fund. Considering the lack of action on this problem during recent years, that’s not a bad achievement. But it does not address several legitimate concerns of Maine workers.

Even if worker advocates are unlikely to get new benefits this session, they should prevent the Legislature from declaring the reform of the unemployment program complete — as a similar argument has been used to defeat changes to the workers’ comp system. The reform is not complete, but at least the department’s bill will keep the program around long enough to allow further improvements in the future.