A lawmaker said he may propose increasing taxes on businesses to help Arkansas pay off about $220 million it owes the federal government for unemployment insurance benefits.
Sen. Larry Teague of Nashville said he’s concerned about the amount of money the state has borrowed to pay for an increase in the number of unemployed workers. The Democrat said he would likely propose increasing the amount of wages paid by businesses that can be taxed for unemployment benefits.
“Philosophically, this owing $220 million to the feds bothers me,” Teague said after a hearing on the state’s budget. “And I think it’s somewhat disingenuous when we talk about how healthy the state is and we owe $220 million to the feds.”
Teague said he didn’t know how much of an increase he’d propose, and that he’s also looking at asking labor groups for concessions on unemployment benefits.
The Legislature meets next month for a session dealing primarily with budget issues. Teague’s proposal would require a two-thirds vote in both chambers to even be considered because it’s not an appropriations bill.
Teague said he didn’t know whether he would be able to win over enough votes to get the tax increase considered, much less win passage in the Legislature. Legislative leaders have said they want to limit consideration of non-appropriations bills.
Last year, lawmakers expanded the wage base that could be taxed for unemployment benefits from $10,000 to $12,000. Officials from the Department of Workforce Services, which oversees the state’s unemployment insurance benefits, said that tax increase generates about $50 million a year.
Ron Calkins, the department’s assistant director for unemployment insurance, said Arkansas is one of 29 states that owes the federal government money for unemployment benefits. Calkins said Arkansas isn’t being charged interest on the money it owes until 2011.
Calkins suggested lawmakers may want to wait before taking action and said there may be a push for the federal government to forgive the debt that states owe for the unemployment benefits.
“There are some federal things going on there that hopefully maybe some of those things will get waived or partially waived,” Calkins said. “We just feel like we’ve got some time to see what happens in D.C.”
Topics Legislation Arkansas
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