WHEREAS:

The unemployment insurance (UI) system is a crucial safety net for workers and a powerful countercyclical economic tool which depends on a stable and reliable system that generates adequate revenue surpluses from employer payroll taxes when the economy is growing in order to pay benefits during economic downturns; and

WHEREAS:
The failure of many states to maintain employer taxes at levels necessary to raise adequate revenue for their state trust funds over the last two decades, combined with record high unemployment claims due to the recession, has created a federal and state unemployment insurance funding crisis; and

WHEREAS:
According to the Internal Revenue Service, 15 percent of employers misclassify their workers as independent contractors, thus avoiding federal and state payroll taxes, including unemployment insurance taxes, and depriving the federal and state governments of billions in revenues for the unemployment insurance program and other benefit programs; and

WHEREAS:
Because of chronic federal underfunding of the UI system, state computer systems are outdated and inefficient, leading to declines in on-time payments of benefits and untimely determinations of employer tax liabilities.

THEREFORE BE IT RESOLVED:
That AFSCME urges Congress to raise the federal taxable wage base, last set at $7,000 in 1983, to $15,000, to index it, to establish a new federal solvency standard for state UI trust funds and to create incentives for states to meet the standard while ensuring states do not reduce state benefit amounts; and

BE IT FURTHER RESOLVED:
That AFSCME supports state and federal investments designed to better detect and prosecute misclassification abuses of independent contractor status, including competitive grants to state unemployment insurance agencies to reward and promote successful state strategies for collecting unpaid federal and state unemployment insurance taxes; and

BE IT FINALLY RESOLVED:
That AFSCME urges Congress to provide significant increases in funds for state unemployment insurance agencies to upgrade and modernize state computer systems, beginning with an additional $500 million increase in the administration’s UI budget request for FY 2011.
 
 
SUBMITTED BY:  
Carol Dotlich, President and Delegate
Lee Novak, Secretary
AFSCME Council 28
Washington