AUGUSTA – Tucked in to the stimulus legislation signed by President Bush last month is a provision that gives Maine $32.5 million as its share of the surplus in the federal Unemployment Trust Fund. In the closing days of the state Legislature, lawmakers are expected to battle over how to use that money.

The Legislature could simply authorize the state’s Unemployment Compensation Bureau to use the money to help pay unemployment benefits, thus reducing the amount of tax paid by employers to finance the unemployment insurance program. Or, as some lawmakers are suggesting, the state could expand the program to cover laid off part-time workers who are not currently covered.

Opponents of the move say expanding the program will not only reduce the savings to employers in the short term, but will eventually end up costing them more when the surplus federal funds are exhausted.

Rep. George Bunker, D-Kossuth Township, co-chairman of the Legislature’s Labor Committee, believes expanding the program “is something we should have done a long time ago. I am preparing an amendment that will do both – give benefits to part-time workers and lower rates.”

The unemployment insurance program is a federal and state partnership that pays benefits to unemployed workers who have lost jobs through no fault of their own. Benefits are paid through payroll taxes assessed on employers, and provide partial, temporary replacement of lost wages. States set their own eligibility and benefit levels with federal guidelines.

The system was created in 1935 as part of the Social Security Act to help unemployed workers and to stabilize the economy by giving them money to buy food, clothing and other essentials. The payments only cover a portion of lost wages to encourage workers to quickly find replacement jobs.

Bunker said last week he will attach his expanded benefits amendment to a similar measure that was first considered by lawmakers a year ago and held over for consideration this session. The original bill called for providing unemployment benefits to laid-off part-time workers, but the benefits were going to be paid for by the state. Bunker’s amendment will allow the state to use the additional federal funds to pay for those benefits.

Technically, part-time workers in Maine are currently eligible for benefits, but they must seek full-time work in order to get the benefits.

Supporters of the proposal argue that current law ignores the changing nature of Maine’s work force, with many workers choosing to work part time, and others forced to work two or more part-time jobs to make ends meet.

Experts say about a third of all those working in Maine are working part-time jobs.

“The nature of the work force has changed greatly,” said University of Southern Maine economics professor Charles Colgan. “Far more people are working part time and effectively are not covered by unemployment. And about 10 percent of those working are self-employed, and they are not covered.”

Colgan said a lot of the jobs being created in the state are part-time and many are the result of new business structures that are often devised to avoid paying unemployment taxes and workers’ compensation insurance.

Chris Hastedt of the Maine Equal Justice Project, an Augusta-based group that advocates for people with low incomes, argues the current system is unfair and should be changed.

“Today, six out of 10 Maine workers do not receive unemployment benefits when they become unemployed,” she said. “If that worker happens to be a low-income woman, the odds are only 1 in 10 that she will qualify for benefits.”

Republicans on the Labor Committee do not like the expansion proposal, citing the long range costs of such a program. The surplus cash released from the federal Unemployment Trust Fund is considered one-time money, even though there may be future surplus distributions.

“When you make the change, the change goes on forever,” said Rep. Russell Treadwell, R-Carmel. “I am opposed to expanding benefits; I was last year and I still am.”

But, Ed Gorham, president of the Maine AFL-CIO, said he hopes the full Legislature will support the measure. He said the issue should not be partisan, noting that the first proposal to expand benefits to part-time workers was introduced by GOP State Senate President Jeff Butland in 1995.

“The whole unemployment system needs to be brought into the 21st century,” he said.

But, Peter Gore of the Maine State Chamber of Commerce said the GOP lawmakers are right to oppose the extension of benefits to part-time workers, even if at first funds from the federal government are used to pay for the program.

“It will be employers through the tax on employers’ payroll that will eventually be asked to pay for this,” he said.

Gov. Angus King said he has not decided how he will propose using the extra federal funds.

“I would not support using it to expand benefits if Kotch is not reversed,” he said, referring to a recent state supreme court ruling in a case involving a worker by that name. The court ruled that nonwork-related injuries must be considered by the state’s Workers’ Compensation Commission staff when deciding what level of benefits an injured worker should receive.

King said the additional federal funds being released to help pay for unemployment benefits would help offset the extra costs employers may face if the Kotch ruling is not overturned by another bill being considered in the Legislature.

That bill also is before the Labor Committee as lawmakers seek to complete their work this week.