Hike in Jobless Benefit Advances

Senate Democrats overcame Republican opposition Monday and approved Gov. Gray Davis’ bill to give $540 million in higher unemployment benefits to Californians who lost their jobs since Sept. 11.

Republicans unsuccessfully sought assurances that $940 million in new federal jobless aid for California would be dedicated to unemployment benefits and not be spent for any other purpose.

“We don’t trust Gov. Davis,” said GOP floor leader Jim Brulte of Rancho Cucamonga.

Majority Democrats countered that the federal funds to extend benefits an extra 13 weeks, approved by Congress and President Bush, would be spent for unemployment benefits. They refused to accept the Republican proposal.

On a straight party line vote of 24 to 5, the bill, SB 2, was sent to an expected friendly reception in the Democrat-dominated Assembly. Nine Republicans and two Democrats did not vote.

Last year, Davis and the Legislature approved the biggest increase in jobless benefits in nearly 10 years, a long-sought victory for organized labor. Effective Jan. 1, the first of four incremental increases boosted the maximum weekly payment to $330, a sum that will rise to $450 by 2005.

However, most workers who lost their jobs in 2001 were ineligible for the higher benefits, including those affected by the events of Sept. 11--about 15,000 airline, hotel and other tourism industry employees.

Originally, the governor’s bill envisioned making the improved benefits retroactive to workers whose unemployment was a consequence of Sept. 11. However, it was expanded to include others who were unemployed on Sept. 11 but for different reasons.

State Sen. Richard Alarcon (D-Sylmar), author of the bill and chairman of the Senate Labor Committee who carried last year’s benefits increase bill, said the governor’s legislation was expanded to include non-Sept. 11 workers as a “matter of equity” for all unemployed Californians.

Meantime, major employer business organizations, including the California Chamber of Commerce, California Taxpayers Assn., newspaper publishers and manufacturers, have warned that the increased benefits will cost far more than had been anticipated and threaten to bankrupt the unemployment insurance trust fund.

In Senate debate Monday, Republicans insisted that even without the retroactive benefits bill, employers face a $530-million tax increase in 2003 to pay for the higher benefits resulting from last year’s law alone.

Brulte told the Senate that Republicans would vote for the Alarcon bill if it was amended to specify that $940 million in new federal unemployment benefits would be spent strictly for unemployment payments in California.

He suggested that the Democratic governor might divert the federal money to help him balance the state budget and erase a projected $14.5-billion deficit.

“Gov. Davis can take that $940 million that is designed to go for unemployment benefits and put it in the state general fund. And businesses will have to pick up an additional $540 million under this bill,” Brulte told the Senate.

The Republicans did get one victory. On the first roll call, they refused to give Democrats the votes needed to pass the bill by a two-thirds majority. Such a majority is required if the benefits are to take effect immediately upon the governor’s signature.

Alarcon had to amend it to make it a simple majority vote bill. This means that instead of taking effect immediately, the benefits would be delayed until 90 days after the Legislature adjourns its special session on economic issues. No one knows when this will be.