Bill to Boost Aid for 9/11 Jobless Gains

Gov. Gray Davis’ emergency bill to extend newly increased unemployment benefits to workers thrown out of a job by the Sept. 11 terrorist attacks advanced Thursday over the opposition of major California employers.

Employers’ lobbyists warned that unless the bill was substantially amended, it would contribute to a threatened bankruptcy of the state’s $5.5-billion unemployment insurance fund in a few years and trigger a drastic increase in unemployment insurance taxes paid by recession-pressed businesses.

They indicated that they support increased payments for workers who were idled by the Sept. 11 attacks, but complained that the bill is written so broadly that it would also cover those whose loss of employment occurred for other reasons.

At a testy hearing of the Senate Labor Committee, Sen. Richard Alarcon (D-Sylmar), author of the governor’s bill (SB 2x), along with officials of the Davis administration, organized labor and jobless airline workers, sought to dismiss the employers’ objections as fear-mongering and insensitive to the economic needs of workers who lost their jobs for reasons other than the terrorist attacks.

At one point, Alarcon, chairman of the committee, criticized testimony of the employer advocates as “basically Chicken Little statistics. It is neither accurate nor compassionate.”

Five Democratic members of the committee voted for the bill; two Republicans voted against it. The proposal was sent to the Appropriations Committee for another hearing, the final stop before action by the full Senate.

As an urgency measure, the bill will require a favorable two-thirds vote of each house for final approval. This means it will need at least one Republican vote in the Senate and four in the Assembly.

The Employment Development Department has estimated that about 15,000 California workers lost their jobs as a result of the Sept. 11 attacks. The retroactive benefits for those workers would total $540 million.

As of Dec. 31, the unemployment fund contained $5.5 billion, much of it considered a reserve for emergency purposes. Administration officials say the retroactive payments would not cause a tax increase for employers.

The Legislature and Davis voted last summer to gradually increase benefits for jobless workers from a weekly maximum of $230 then to $450 in 2005. Davis and lawmakers mistakenly assumed that the new benefits would apply to those who lost their jobs as a result of Sept. 11--chiefly airline, hotel and tourist industry workers.

Later, they learned that the new law, also written by Alarcon, did not provide the increased benefits to those workers because it did not take effect until Jan. 1. As a result, Davis proposed making the increases retroactive to Sept. 11.

Lobbyists of the California Chamber of Commerce and the California Taxpayers Assn., which represent businesses and major employers, said they were surprised to learn that the retroactive bill applied not only to the Sept. 11 jobless workers, as he had indicated, but to unknown numbers of others who lost their jobs last year and whose cases are open.

“It is much broader than it ought to be,” said Carol Evans of the taxpayers association. “Their version is that anyone who is unemployed for any reason is going to get those increased benefits.”

Coupled with last year’s law to increase benefits, which raised California from near the bottom in unemployment payments, the retroactive bill could invite about 750,000 new claims, including those of people who have since found employment again, said Julianne Broyles of the California Chamber of Commerce. These claims would drain the fund, she said.