Saturday, May 16, 2009

Indiana Chamber Of Commerce Shows Its Hypocrisy

Indiana's business and labor leaders forged a bipartisan agreement to alter unemployment insurance benefits back when Frank O'Bannon was governor. After years of feuding, the two opposing camps decided that both sides should get their cake and eat it too. What they agreed to do was reduce unemployment insurance premium taxes paid by business while increasing benefits paid to unemployed workers. That set the state's unemployment insurance fund on a dangerous course towards eventual insolvency. Everyone knew it was going to happen but instead chose to ignore the problem as if it would simply go away.

When the current economic recession took hold, Indiana became one of the first states in the country to exhaust its reserves. Indiana has been borrowing $7 million a day from the federal government since late last year. Our state's current debt to the federal government tops a whopping $800 million. That number will likely exceed $1 billion by year's end, a little less than the state's entire rainy day reserve funds.

Senate Republicans and House Democrats set aside competing ideologies and views on unemployment benefits to work out a compromise plan to fix the current bankrupt system to avoid a federal take-over of Indiana's unemployment insurance program. Big businesses, represented by the Indiana Chamber of Commerce and the Indiana Manufacturers Association, excoriated lawmakers for approving the plan and urged Gov. Mitch Daniels to veto their legislation. The Indiana Chamber lamented the $700 million in premium increases that will be paid by businesses over the next two years. The Indiana Chamber called it "a focused attack on statewide businesses." It predicted the new law will lead to even more job losses and higher unemployment.

What the Chamber of Commerce didn't tell you is that they wanted to force small businesses to shoulder a greater burden of paying for the unemployed rather than larger businesses and charge a new unemployment tax on workers. According to a press release issued by Senate Republicans, business groups representing small business owners applauded many key provisions of the new law, including the National Federation of Independent Businesses and the Indiana Restaurant Association. As the Senate Republican press release notes, big businesses took advantage of the old unemployment system through frequent furloughing of workers. "Some businesses even factored in UI benefits in collective bargaining agreements, knowing that their planned annual furloughs would allow employees to draw more out of the UI fund in just one week than the company paid in premiums the entire year," the release said. The new tax on workers proposed by the Indiana Chamber would have made Indiana only one of two states in the nation with such a tax.

House Democrats had originally proposed a plan that would have hiked premiums paid by Indiana businesses $1.2 billion a year and lacked meaningful reforms. The Senate plan shaved the tax increase enacted by 75%. Senate Republicans sought to balance the higher taxes with cost-saving, needed reforms. Many of those reforms were supported by the Indiana Chamber, but without a new tax on workers, the Indiana Chamber opposed the plan. One of the reforms implemented requires unemployed workers to present evidence they have applied for jobs, not simply been looking for a new job. Workers who turn down "suitable work" will be penalized. The new law also makes it harder for workers fired for misconduct to collect unemployment benefits. A new training program will help retrain unemployed workers.

In a nutshell, the new system will set taxes paid by business based on traditional insurance plans. If you are a higher-risk driver, you pay higher auto insurance premiums. Similarly, businesses that lay off more workers will incur higher unemployment insurance tax premiums. "Because Indiana's unemployment insurance will be operated in the future like other insurance programs, close to 45,000 Hoosier employers who have never tapped the fund (that would include small business owners like me) may actually see slight decreases in premiums," says Senate Republicans. Even with the higher taxes many businesses will pay, their rates will still be lower than most of neighboring midwestern states. Senate Republicans believe their plan will put the state system back into balance by 2012.

The Indiana Chamber of Commerce's attacks on the unemployment insurance plan signed into law by Gov. Daniels have been led by its president, Kevin Brinegar, a permanent fixture on the State House lobbying scene. Brinegar is no friend of the taxpayers. He's all for big business and what's good for big business. He could care less about small businesses and average taxpayers. If you don't believe me, you've got to check out a letter to the editor he penned to the Star this weekend supporting the bailout of Marion County's Capital Improvement Board. Brineger, arguing that the CIB bailout must be a part of the special session agenda, writes:

While the CIB is responsible for operating Indianapolis' sports facilities and the Indiana Convention Center, those venues are critical to the state's economic vitality and image. We would not want to envision Indiana without the top-level sports franchises that are important to the quality of life for current residents and an attraction for newcomers.

Conventions are a crucial piece of the pie. The Downtown hospitality industry is responsible for 60,000 jobs and $3.5 billion in annual impact.

That's why it is so important that the legislature gets the ball rolling by giving the City-County Council the authority to pursue the necessary solutions. All of Indiana will be the beneficiary.

Is this guy joking or what? "All of Indiana will be the beneficiary?" "Important to the quality of life for current residents? "60,000 jobs and $3.5 billion in annual impact?" Brinegar completely strips himself of any credibility he has as an advocate for Indiana businesses. While opposing the plan to shore up Indiana's bankrupt unemployment insurance trust fund making up for all of those tax cuts and benefit increases he negotiated years ago that facilitated the current unemployment system's insolvency, he now wants to ask the little people in Marion County to dig deeper into their pockets and pay higher taxes to bail out the grossly mismanaged Capital Improvement Board. This is the same Kevin Brineger who has advocated the elimination of inefficient township governments and other local government reforms proposed by the Kernan-Shepard Commission. Yet he wants to reward a local government entity that has been running deficits for a decade and has largely operated in the dark with little transparency. What a total hypocrite.

The problem with Kevin Brinegar is that he's one of those guys who can attend a Colts or Pacers game any time he wants. Brinegar doesn't have to pay a dime. He can sit in a corporate suite, enjoy free food and drink and entertain lawmakers on the dime of his business organization and its big business members. He doesn't have a clue what it costs average game-goers to attend a Colts or Pacers game. The only quality of life Brinegar is concerned about losing is his own; his support of the CIB has nothing to do with the quality of life of every day Hoosiers or he would be demanding an investigation and more accountability from the CIB before taxpayers are asked to pay even higher taxes that will largely go to subsidize the state's two wealthiest families, the Irsays and the Simons. I used to really respect Brinegar, but his antics this past session have permanently marred his reputation.


Unknown said...

I think you are absolutely right about the UI compromise. Some businesses have been enjoying a free (well, reduced) ride for a while, and this compromise spreads the burden out in a more equitable way.

IMA wanted to have it both ways - they pay low rates when times are good and few people are unemployed...but when times are bad and many people unemployed, they also pay low rates on the backs of the people who now need UI.

It also seems like the Senate R's did a very good job of negotiating a compromise with the House D's given the reality that the House could always reject the Senate's offer, keep the old system, and continue to receive federal money. Which, of course, the feds would address by raising taxes on IN businesses to make up the shortfall.

Paul K. Ogden said...

That the State Chamber would endorse raising hospitality taxes so that we have about the highest such taxes in the country shows how the organization has lost its mission.

Gary R. Welsh said...

Paul, I posted the statistic showing that taxes on a typical family with a household income of $75,000 are the 5th highest in the nation in this city. The Chamber of Commerce has a lot to do with that. They've always pushed for higher taxes on little people to support tax breaks and giveaways to big business. Harrison Ullmann used to write in NUVO about the regressiveness of taxes here and he was right. What the Chamber doesn't understand is that the little people can move out of Marion County, leaving behind vast neighborhoods of the city in sharp decline and falling tax revenues. Despite doing everything conceivable to hold taxes down for businesses over the years, our industrial base in Indianapolis has virtually disappeared. Indianapolis used to be headquarters for many significant businesses. Few of those businesses call Indianapolis their home today.