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How to provide more help for unemployed Virginians

By Steve Shannon
Sunday, July 18, 2010

Virginia's unemployment rate is 7.1 percent. Some areas of Virginia have twice this rate, with Martinsville topping the list with more than 20 percent. These cold numbers translate into nearly 300,000 Virginians and their families who are in desperate need of help from their elected officials. Yet the U.S. Senate and Virginia state officials seem disconnected from families hardest hit by the worst economic situation since the Great Depression.

The Senate in June failed to extend long-term unemployment benefits and has continued to dither, a delay highlighted by The Post's July 13 editorial "Jobless benefits, now." And Virginia Gov. Bob McDonnell and members of the General Assembly also have failed to help, by allowing $125.5 million in federal aid to languish.

Virginia's elected leaders still have an opportunity to assist unemployed Virginians, but they will have to be willing to reconsider prior decisions of the Virginia General Assembly.

The American Recovery and Reinvestment Act of 2009 authorized $7 billion to the states for their unemployment insurance programs. As a condition of receiving Virginia's full share, which is an additional $125.5 million not yet received, the state would be required to amend its eligibility criteria for unemployment benefits to include two of these four categories: (1) people seeking part-time work; (2) people who are in a state-approved training program who have lost their jobs in a declining industry; (3) people who became unemployed because of a compelling family reason, such as caring for a sick or disabled family member; or the state can (4) offer eligible claimants with dependents a stipend of at least $15 per week for each dependent.

In both the 2009 and 2010 sessions of the Virginia General Assembly, the legislature failed to pass legislation expanding the eligibility criteria, thus preventing Virginia from collecting this $125.5 million in economic stimulus funds. Virginia must apply for these funds no later than Aug. 22, 2011.

Advocates for the state legislation focused on the extraordinary economic downturn resulting in thousands of Virginians becoming unemployed, most through no fault of their own. Opponents focused on the possibility that Virginia businesses would have to pay additional money -- estimated at $2.62 to $4.50 per employee annually -- to the state's unemployment insurance trust fund because of these added beneficiaries.

The Labor Department has clarified that while the federal law's intent is to permanently expand the eligibility criteria for citizens, states will not have to return the federal funds if they later scale back the eligibility criteria.

If Gov. McDonnell, who has opposed Virginia accepting these federal funds, believes the Virginia General Assembly lacks the political will to scale back on the eligibility criteria once the money is distributed, there are creative ways to minimize the long-term impact on Virginia businesses. One example could be to enact a business deduction to offset any increase in an employer's contribution to the unemployment insurance trust fund caused by expanding the eligibility criteria.

This is not the time to shake a fist at Washington and just say no. Gov. McDonnell has exhibited a penchant for studies and commissions. One is an Economic Development and Job Creation Commission. Currently, the commission does not have on its public agenda consideration for how to obtain the $125.5 million to assist unemployed Virginians and, as a corollary, distressed areas of Virginia where those Virginians reside.

This is a missed opportunity to bring together stakeholders who can think through ways to minimize the tax implications on Virginia businesses with the goal of assisting our fellow citizens through this period of economic uncertainty.

In the meantime, Gov. McDonnell should immediately make it clear to Virginia's congressional delegation and to the leaders of his party that he favors extending long-term unemployment benefits. As this newspaper pointed out in its July 13 editorial, "Unemployment benefits, which are most apt to be immediately plowed back into the economy, are about the most stimulative form of spending. Extending them is both fiscally sensible and morally decent."

This is an opportunity for the governor to step forward and find a way to say yes to helping citizens who so need our help.

Steve Shannon is a Virginia lawyer in private practice. He served three terms in the Virginia General Assembly and was the Democratic nominee for attorney general of Virginia last year.

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