Strings on money for jobless create knots

By Lisa Mascaro (contact)

Wednesday, March 4, 2009 | 2 a.m.

Washington — Democratic Rep. Shelley Berkley says it would be foolish for Nevada’s governor to forfeit unemployment money coming to the state in President Barack Obama’s economic stimulus package.

But Republican Sen. John Ensign says that even in the face of the state’s 9.1 percent jobless rate he understands the governor’s reluctance to expand Nevada’s long-term commitment to the unemployed.

Nevada lawmakers are weighing in on the issue this week as Gov. Jim Gibbons considers whether to accept the entire $77 million available to Nevada through the American Recovery and Reinvestment Act, or to join several other Republican governors and turn down a portion of it that comes with strings attached.

Under the $787 billion stimulus bill passed by Congress last month and signed into law, states are eligible for more than $40 billion in unemployment assistance.

Included in that is funding to increase weekly unemployment checks by as much as $25 and extend jobless benefits through the end of the year. Benefits usually expire after 26 weeks.

But some Republicans are balking over a portion of the assistance. Of the $40 billion total, $7 billion is designated for states that are willing to expand eligibility to a wider pool of jobless workers during the economic downturn. For example, benefits could go to part-time workers who lose their jobs because they relocate for a spouse’s job. States also must use a worker’s most current wages to calculate benefits.

Many states already offer these enhanced benefits. Nevada does not.

Under the stimulus bill, the extra funding is available through fiscal 2011. At that time, states must decide whether to retain the expanded pool and pay for it with additional state money, or take the politically distasteful step of cutting back on benefits.

Gibbons’ office has said the governor is “hesitant to accept any part requiring an expansion in a state program that is left unfunded once the stimulus money is gone.”

Unemployment insurance is traditionally funded with a tax on business, and governors in some states worry they will be forced to raise those taxes if they want to continue offering extra benefits.

“That’s the problem with the unemployment benefits the way that the stimulus bill did it,” Ensign said. “It doesn’t just give them the money for now. It ties them into higher benefits in the future.”

Ensign said he spoke with Gibbons about the issue when they were both in Elko recently, and said the decision is “up to him.”

“But I understand why governors across the country have a real problem with it and why a lot of them are not taking it,” Ensign said.

Berkley said if Nevada follows suit, “We will be so foolish.”

“It would be a terrible disservice to all of those people who are unemployed and who are looking to the government for that bridge to get back to work,” Berkley said.

A spokesman for Democratic Rep. Dina Titus said she is “very concerned about the comments from the governor’s office.”

With the state’s unemployment at a 25-year high and expected to climb to double-digits, Titus “encourages the Legislature to carefully consider accepting these funds,” spokesman Andrew Stoddard said.

Senate Majority Leader Harry Reid’s spokesman said “in a state (where) you’ve got 9.1 percent out of work, we’ve got to help them.”

Reid’s office notes that economist Mark Zandi at Moody’s Economy.com estimates that every $1 spent on unemployment benefits multiplies to $1.65 spent in the economy.

“Not only is it the right thing to do on the human level, it’s the right thing to do on an economic level,” Reid spokesman Jon Summers said.

Berkley notes that part-time employees make up much of Nevada’s tourism-based workforce and would benefit from qualifying for unemployment during the downturn. More women, she noted, work part time than men, making them disproportionately hit by the lack of benefits under the current system.

The governor has assembled a working group that will oversee the state’s expenditure of stimulus funds, and determine the best way to address the unemployment issue.