By MARY SELL and MADDISON BOOTH, Alabama Daily News
MONTGOMERY, Ala. – The federal relief spending bill moving through the Legislature directs the lion’s share of $772 million to broadband internet infrastructure, water and sewer projects and health care.
But there’s also about $79.5 million for the state’s Unemployment Insurance Trust Fund in an effort to reduce taxes on the thousands of employers who pay into the system that provides unemployment benefits to Alabamians, including record numbers during the COVID-19 pandemic.
The Unemployment Trust Fund has a balance of $614 million. Pre-pandemic, the balance was $697 million, Alabama Department of Labor Secretary Fitzgerald Washington told lawmakers Wednesday.
Employers’ saw a tax increase of 72% last year, even after lawmakers allocated about $385 million in federal CARES Act money to the fund. But without the CARES money, that increase would have been 500%.
With the $79.5 million ARPA allocation, employers will see a 29% decrease over last year, Washington said.
“If the requested amount is not approved, employers will receive a minimum of a 3% tax increase,” he said.
Exactly how much money employers pay in unemployment taxes varies on their experience rating.
An example provided to lawmakers showed that a company with 20 employees and a taxable payroll of $160,000 currently pays $2,464.
Sen. Arthur Orr, R-Decatur, said the objective is to get businesses’ unemployment taxes back to pre-pandemic levels.
“By using this nearly $80 million, we’re getting closer to that goal,” he said.
Sen. Jim McClendon, R-Springville, a member of the Senate General Fund committee, said the unemployment funding will shore up the fund at the expense of the federal government.
“This contribution to (the unemployment insurance fund) will help every employer, big time ones and mom and pop shops, to keep their contribution rates down.”
Both the Senate and House General Fund budget committees on Thursday unanimously approved spending bills for about $772 million in American Rescue Plan Act funds. Called companion legislation, the two bills contain the same language but were filed separately, one in the House and one in the Senate.
Kirk Fulford, deputy director of the Legislative Services Agency, told Senate committee members that about 85% of the money was going to three categories: Broadband infrastructure (36%), water and sewer infrastructure (29%), and health care (20%).
In the House, committee members were also in agreement on the spending plan, including the unemployment allocation.
The $79.5 million is important “so that the trust fund will have the funds to provide for its purpose,” Rep. Victor Gaston, R-Mobile, said.
Rep. Lynn Greer, R-Rogersville, said that more money is still needed for broadband and water and sewer projects, but another about $1 billion in ARPA funding is coming to the state in late spring.
Rep. Laura Hall, D-Huntsville, said that while she’s OK with the ARPA allocations at this point, she and other Democrats hope the spring allocation will be used on housing assistance and more funding for health care.
She and Rep. Napoleon Bracy, D-Mobile, said the unemployment funding was reasonable.
“I think (the ARPA funds) are being allocated in a much needed way,” Bracy said.
Bracy said his only concern is ensuring transparency in spending.
This legislation creates the 14-member Joint Legislative Oversight Committee on American Rescue Plan Act State Funds.The committee can request information from various agencies about how funds are spent.
The bills’ other spending includes:
- Up to $20 million for assistance to emergency response providers.
- Up to $11 million for reimbursements of expenses of state inmates housed in county jails from March 3, 2021 to December 31, 2021.
“This money is being distributed far and wide. It’s going to help a lot of people and a lot of institutions, McClendon said.
House and Senate votes on the bills are expected Tuesday.