Congress has voted to extend federal emergency federal unemployment compensation (EUC) benefits and the Social Security payroll tax cut for another two months.
Just before Christmas and after much political debate, U.S. lawmakers adopted the Senate version of the “Middle Class Tax Relief and Job Creation Act of 2011.”
Emergency unemployment benefits were to expire on Dec. 31 for approximately 160 million people.The payroll tax for employees would have risen in January to 6.2% from the current 4.2%.
The two-month reprieve means that Congress will have to start the debate all over again on a longer extension of the tax cut and unemployment benefits.
Senate version prevails
The Senate plan includes a two-month EUC extension with a continuation of provisions of up to 99 weeks in states with the highest unemployment rates.
The House would have extended EUC for a year but limited the potential total number of weeks to 79 instead of 99 in the states with the highest unemployment rates and generally 59 in states with lower unemployment rates.
Also included in the House version—but not in the final bill--were work search standards and reemployment service provisions to make sure that individuals are able, available and actively seeking work and getting help in their searches.
‘No-reduction’ provision fails
A House repeal of the “no-reduction” provision in current law that prohibits states receiving federal reimbursement for emergency unemployment compensation payments from reducing benefits also failed in the final version.
As a result, the Senate version creates an issue for states that have modified benefits to ensure the solvency of their unemployment compensation funds. Some states reduced the average weekly benefit amount effective after the previous ending date of the EUC program (June 11, 2012) and before the new end date of August 15, 2012.
Congress continues to work on the EUC issue and CBIA will provide updates. For more information, contact CBIA’s Kia Murrell at 860.244.1931 or email@example.com