Pa. may turn down $273 million in stimulus aid

The federal government is offering $273 million in stimulus funding to help more Pennsylvanians qualify for cash unemployment benefits.

But four months after the offer was made, the legislature has not taken the money. And there is no certainty it ever will.

Republican leaders and business groups - in Pennsylvania and some other states - object that the funding would come with unacceptable strings attached.

Pennsylvania would have to slightly modify its law governing how long and how steadily a person must have worked to qualify for aid. When the stimulus money runs out, opponents say, the state would be left paying the more liberal benefits on its own - about $69 million a year, at current jobless rates.

To Democratic leaders and their allies in organized labor, it makes more sense to take the money now - when thousands of Pennsylvanians are losing their jobs each month - and worry later about the long-term cost.

They say the $69 million is a relatively minor amount, anyway, for an unemployment fund that spends $2 billion to $3 billion a year, depending on the economy.

Democratic State Rep. Marc J. Gergely, acting chairman of the House Labor Relations Committee, called the stimulus offer "free money."

Gergely said that, within a week or so, he would introduce a bill to take advantage of the funds. But he said he did not expect action soon.

"Why wouldn't we want $273 million for the families of Pennsylvania?" said Gergely, who represents an old steel area in the Monongahela Valley near Pittsburgh. "This isn't for luxuries. It's for basic necessities."

New Jersey, the first state to qualify for the money, received $207 million March 27 and is using it to help the unemployed.

So far, 31 states have qualified for at least a portion of the money, which totals $7 billion nationally.

(Additional stimulus funding has extended the period in which laid-off workers can collect benefits. The maximum is now 72 weeks.)

Some Republican governors said early on that they would not amend their eligibility rules. But as jobless rolls have grown, some have overcome their reservations.

A dozen states have changed their laws: Arizona, Arkansas, California, Idaho, Iowa, Kansas, Minnesota, Montana, Nevada, Oregon, South Dakota, and Wyoming.

Nineteen states, including New Jersey, already had unemployment-compensation rules that pretty much met the federal requirements.

In Pennsylvania, Gov. Rendell supports taking the money, but he has not made it a front-burner issue. He has spent more of his political capital on his dispute with Republicans over the state budget, which must be adopted by June 30 to keep state government in operation.

"There are a lot of big issues, and this is one of them," said Ken Snyder, Rendell's chief spokesman for how the state will handle the $9.4 billion, overall, that it expects to receive from the stimulus package, formally known as the American Recovery and Reinvestment Act.

"This is too big to let fall between the cracks," Snyder said. "It's not often the federal government puts hundreds of millions of dollars on the table and says, 'Here, go help people.' Not to take advantage of that doesn't make sense."

Snyder said the stimulus rules would qualify 28,000 more people to collect benefits in Pennsylvania.

Another of the "big issues" that Snyder referred to is the ill health of the state's Unemployment Compensation Trust Fund, which is financed by payroll taxes.

The trust fund cannot now meet its obligations to the 420,000 people currently receiving benefits - up from 139,000 two years ago, before the recession. Weekly cash payments average $320; the maximum is $558 per week.

In recent months, the trust fund has borrowed more than $500 million from the federal government. It expects to borrow an additional $1 billion before the year ends. This pattern, by law, can't go on forever.

Gergely and other legislators said the final decision on whether the state sought the $273 million in stimulus money might depend on broader negotiations over shoring up the trust fund. Employers and employees might be asked to pay more in taxes.

It's time to "get control of the system," not to broaden worker eligibility, said Gene Barr, vice president of the Pennsylvania Chamber of Business and Industry.

Republicans, in control of the Senate, are in position to block eligibility changes unless a compromise is reached. But no compromise is in the offing.

Rendell in December appointed an advisory council composed of Republicans and Democrats, business leaders and labor leaders, to resolve the unemployment fund's problems.

Central Pennsylvania Republican John R. Gordner, chairman of the Senate Labor and Industry Committee, said the commission had met six or seven times without reaching a resolution.

Gordner said Republicans might be willing to write a "sunset" provision into a new law saying that as soon as the stimulus money was used up, the eligibility rules would revert to what they are now.

But the Obama administration won't permit that, he said.

The immediate change sought by Washington deals with the period in which a laid-off person must have held a job to get benefits.

Current state law says any work done in the current quarter and the previous one does not count toward eligibility. The state looks only at the work a person did in the four quarters before that.

This means that if a person got laid off today, during the middle of a quarter, none of the work he or she had done at any time this year would be considered. Only 2008 would count.

The state could qualify for at least one-third of the stimulus funding if it made eligibility more current. This would help construction workers and other seasonal employees.

Pennsylvania could get the additional two-thirds of the $273 million by liberalizing its rules in other ways, such as allowing at least $15 a week for a worker's dependents or permitting benefits for people seeking only part-time work.

The Obama administration wants stimulus money to be spent as quickly as possible. But it will give states until Aug. 22, 2011, to access the jobless aid.

Sharon M. Dietrich, president of Community Legal Services of Philadelphia, an advocate for the changes, suggested a solution to the assertion that, once the extra federal money ran out, the state would be left holding the bill.

Change the law, again, she said - to the way it was. Nothing in federal law prohibits that.

"There's no reason, if we decide it's a bad matter of public policy, that the legislature couldn't change it back," she said.

But Gordner said thatonce benefits were enacted, it became "very difficult," politically, to take them away.