October 20, 2005

CONTACT: Eric J. Oxfeld 202-637-3463

WASHINGTON, D.C., October 20, 2005 – In response to congressional passage of H.R. 3971. which includes a provision transferring $500 million to the Katrina-depleted unemployment compensation funds of Alabama, Louisiana and Mississippi, UWC released the following statement:

“UWC strongly supports the proposal included in HR 3971 to transfer $500 million in Federal Unemployment Tax Act (FUTA) revenue to the state unemployment trust fund accounts for Alabama, Louisiana, and Mississippi, the Gulf Coast states most heavily affected by Hurricane Katrina. $15 million is designated for Alabama, $400 million for Louisiana and $85 million for Mississippi. These funds will partially replenish their unemployment compensation funds, which were depleted by increased claims after the storm. In addition, the bill includes a technical amendment allowing all states to use their federal unemployment administrative grants to assist other states in which the President declared a disaster.

“This is a good first step, although it doesn’t fully replenish the states’ storm-depleted unemployment trust funds. There may be a need for additional funding, and some workers displaced by the storm may need a benefit extension. But there is no need for haste because they will not exhaust their 6 months of regular state unemployment benefits until the first week of March, 2006. Both Louisiana and Mississippi are likely to trigger a 13 week extension under the permanent Extended Benefits (EB) program, without any action by Congress. Furthermore, many displaced workers are in locations where there are labor shortages.

"UWC is sympathetic to the Congressional desire to aid storm victims displaced from their jobs. The proposed transfer provides additional funds and the flexibility for states to allocate the money according to differing local needs, such as increased administrative costs in storm-affected regions, maintenance of trust fund balances (which in turn helps reduce the need for payroll tax increases), coverage of benefit costs not charged to a specific employer or otherwise not recoverable and a temporary benefit extension as needed. Enacting the proposed transfer now will speed economic recovery and allow time for the development of additional targeted relief proposals.

"Special thanks are owed to Representative Jim McCrery, who introduced and managed the bill on the House floor, and the House Ways & Means Committee for their leadership on this measure, as well as to the entire House and Senate for their speedy action yesterday on H.R. 3971."

-UWC-