President Trump’s FY 2018 Budget Includes $13 billion UI tax Increase to pay for Required Paid Parental Leave

The President’s FY 2018 Budget was released today and contains a number of items that impact Unemployment Insurance, particularly the proposed required parental leave. The Budget summary document may be accessed athttps://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/budget.pdf

The budget document includes:

Provide Paid Parental Leave. During his campaign, the President pledged to pro­vide paid family leave to help new parents. The Budget delivers on this promise with a fully paid-for proposal to provide six weeks of paid family leave to new mothers and fathers, including adoptive parents, so all families can afford to take time to recover from childbirth and bond with a new child without worrying about paying their bills.

Using the Unemployment Insurance (UI) system as a base, the proposal will allow States to establish paid parental leave pro­grams in a way that is most appropriate for their workforce and economy. States would be required to provide six weeks of parental leave and the proposal gives States broad latitude to design and finance the program. The proposal is fully offset by a package of sensible reforms to the UI system—including reforms to reduce improper payments, help unemployed workers find jobs more quickly, and encourage States to maintain reserves in their Unemployment Trust Fund accounts. The Administration looks forward to working with the Congress on legislation to make paid parental leave a reality for families across the Nation.

The proposal indicates that the paid parental leave program will cost $18.5 Billion over the ten years ending 2027 and be paid for in large part with $12.9 Billion in increased state UI tax receipts due to a new federal solvency standard, $2.2 billion in improved UI program integrity, and more than $4.0 billion in savings from improved eligibility assessments and reemployment services.

UWC has opposed federally mandated solvency measures, opposed federally mandated increases in state unemployment taxes, and opposed the use of unemployment insurance tax dollars to be used to pay individuals who are not unemployed or have not become unemployed through no fault of their own in connection with employment.  This proposal is inconsistent with all of these basic tenets of the UI system.

We have favored increased attention to UI program integrity, reemployment eligibility and reemployment services that encourage reemployment and reduce the duration of unemployment compensation.

We are conferring with congressional staff with respect to details, and expect to respond with concerns as language is considered through the legislative process.

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