Tenn. ends $40M in child allowances for unemployed

Friday, June 21, 2013 at 3:27pm
Updated 4:17 p.m.

Tennesseans drawing unemployment benefits will soon lose a weekly $15-per-child allowance as part of a new law signed by Republican Gov. Bill Haslam.

The Department of Labor and Workforce Development said Friday that the change will help bolster the state unemployment trust fund, which could lead to a reduction in unemployment taxes paid by businesses.

According to the department's projections, ending the allowance for dependent children in the budget year beginning July 1 will save the state $40 million per year.

Lawmakers created the child allowance in 2009 in order to qualify for a nearly $142 million federal stimulus grant. Now that that money had been spent, the Republican-controlled Legislature earlier this year passed a bill to end the program. It passed 66-23 in the House and 24-5 in the Senate.

"That benefit was nice while it lasted and while it was being paid for with federal dollars," said Sen. Jack Johnson, R-Franklin, a main sponsor of the bill to make the benefit changes.

Advocates for low-income families are criticizing the change.

"They're balancing the trust fund on the backs of these kids," said Michele Johnson, the executive director of the Tennessee Justice Center. "It will have real consequences for families across the state."

Facing dwindling funds in the state's unemployment trust fund in 2010, lawmakers raised the amount of wages subject to the unemployment insurance taxes from the first $7,000 to $9,000, and increased premiums by 0.6 percent. The fund, which was insolvent as recently as March 20010, has a current balance of nearly $800 million.

The law includes provisions for reducing the taxable income to $8,000 if the fund reaches $900 million, and back to $7,000 if it reaches $1 billion. The premium hike could already be eligible to be undone because the fund has more than $650 million in it.

Sen. Johnson said that while he's sympathetic to the plight of unemployed parents, he argued that reducing the amount owed by business owners will have a beneficial effect.

"And we want to leave as much money in their hands as we can so they can create more jobs, which will reduce the unemployment rate and get these people off of unemployment compensation," he said.

Conversely, allowing the fund to be drawn down hurt the state's jobs picture, Johnson said.

"If we continue to make those payments for dependent children, it is going to potentially make our unemployment trust fund insolvent," he said. "Which means we're going to have to go and raise premium payments for employers ... putting an unfair burden on people who were creating jobs in the state."

Haslam spokesman David Smith said the Republican governor deferred to the sponsors and the Department of Labor to work on the bill.

"The governor was comfortable with the final language," Smith said in an email. "The department continues to work with Tennesseans to connect them with new opportunities."

9 Comments on this post:

By: ancienthighway on 6/21/13 at 2:43

This makes perfect sense to me. Those business owners have extremely high expenses that cut into their profits. We need more laws that will take money from the poor and give it back to the people that deserve it!

I propose that we change the title of Governor to CEO, change the state governing body into a Board of Directors with the only requirement being financial status, and member of the Board are selected by the Board. Enough of the little people with the false belief that they have a voice. After all, we pretty much have that now. Let's just call it what it is.

By: pswindle on 6/21/13 at 3:01

This is unbelievable ! Do children need to eat? If their parents are unemployed, where is the money for food coming from. Most of the unemployed that the parents receive goes for housing. A billionaire can sit back in his mansion and tell the poor to go to hell. He and the Legislative Branch has taken every safety net away from the working people of this state. The unions made sure that the workers received fair pay for a day's work, now that is gone. He wanted to lay off hundreds of state workers. but the court stopped him, but he may get his way yet. I will predict that the poor GOP will elect this man of the rich for another four years. By then, the state will have two classes of citizens, rich and poor with no middle class.

By: Emoshea on 6/21/13 at 10:02

Let's talk about teachers.

By: Emoshea on 6/21/13 at 10:02

Let's talk about teachers.

By: Left-of-Local on 6/24/13 at 8:09

After all, who cares about middle class kids, right, GOP?

By: courier37027 on 6/24/13 at 8:46

If this decision offends any of you, take $15 out of your own pocket and give it to someone. Some of you are experts at spending other people's money without a hint of appreciation. Before you throw barbs back at me, last week I gave a neighbor $75 to pay a phone bill. If this bill lowers business overhead, good. That means more money in your own pocket, also good.

By: courier37027 on 6/24/13 at 8:52

Businesses should pay their vendors and employees. Anything that reduces intrusive government largess should be applauded.

By: yucchhii on 6/24/13 at 2:07

I say, bring all your children to the capital and sit around so haslam can see the mouths he will be taking FOOD OUT OF...especially those who are smart enough to understand that CRIMINALS like haslam are the ones who are making it so they will starve!!! Ahhh but then if that were to happen, there would be a bunch of IDIOTS to cry and whine that they're a bunch of bums and they are druggies hanging out like occupy protestors. The same people who did NO research on the protestors and automatically think they're unemployed bums doing drugs when the protestors have jobs (More than likely paid MORE than some of you WHINERS) and struck a nerve on the politicians so they had to hide something by having the protestors ILLEGALLY arrested and making a law so the protestors can't expose the corruption of the CRIMINALS who run the state and the country!!! I know that sure as hell, I wouldn't want THOSE people running anything either...haslam is supposed to be running the state...he can't even run a vacuum cleaner!!!

By: DanicaF on 7/17/13 at 4:56

The Labor Department said Thursday that joblessness application filings fell by 6,000 in the previous week. The numbers concur with other signs that the nation is experiencing modest job growth. If you need help getting by while waiting on a job, get an installment loan.