What derailed unemployment insurance commission?

Billions of dollars are going to be pumped into the state’s unemployment insurance trust fund, but there is no guarantee the money will solve the fund’s problems.

A special legislative commission set up to find solutions to the long-term problems that have plagued the fund was unable to come to any consensus last week, which means the same issues that undermined the fund during the pandemic are likely to recur at some point down the road. 

“Since we haven’t fixed anything, there’s no reason to think we’re going to have a different outcome. The economics and the politics suggest we’re going to end up in the same place, which is to say we’ll be underfunding moving forward because we weren’t able to agree on changes,” said Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University and a member of the unemployment insurance commission. 

As Horowitz explained on The Codcast, the unemployment insurance trust fund was a New Deal initiative to provide some level of financial support for people who lose their jobs through no fault of their own.

The financial support is funded through assessments on businesses. Businesses say the assessments are taxes on them, but Horowitz says most economists believe workers actually foot the bill because companies account for the assessments by paying their workers slightly less. 

The key to a sound unemployment insurance system is to set aside money from employers in good times so it can be spent in times of high unemployment. Horowitz said the system is designed to address any looming shortfalls automatically, by raising assessments on businesses if the balance in the fund dips too low.

“For 15 years, it never happened. The trust fund was low but legislators stepped in to say, ‘You know what, let’s not raises taxes, now’s not a great time to raise taxes,’” Horowitz said. “They just never did it.” 

There’s also a technical problem with the way money is collected. Horowitz said businesses pay assessments on only the first $15,000 of an employee’s salary, not the full paycheck. That means as salaries rise, and unemployment benefits rise in concert, the assessments remain static, so the gap between collections and payouts widens.

The commission was set up to recommend solutions for these and other problems to the Legislature. But after 11 meetings over the course of a year, the commission couldn’t muster the necessary two-thirds support for any major solutions.

The short-term fix is fairly simple – the state directed $500 million in federal COVID relief money into the trust fund along with $2.6 billion in bond money, with businesses paying the interest on the bonds.

But none of the major underlying problems facing the trust fund are fixed, according to Horowitz. He said the failure to address those problems probably was unavoidable, given the fairly even split between business and union members on the commission.

He said most of the commission members echoed the views of their constituencies and the inability to meet in private because of the state’s Open Meeting Law meant the members never could compromise. 

“We really weren’t that far apart, but we couldn’t do that,” said Horowitz. “People are in character and they’re caught up in shorter-term things and everything happens publicly and this makes horse-trading impossible.” 

 BRUCE MOHL 

 

FROM COMMONWEALTH

Bigger, longer: Wind technology is evolving at a rapid pace, and the state’s Charlestown Wind Technology Testing Center is trying to keep up by expanding the size of the facility to accommodate longer and longer blades. 

– At the testing center, blades are put through all sorts of stress tests to see if they can hold up over years of operation. The facility is currently 90 meters long. To test General Electric’s new 107-meter blade, the end had to be lopped off. To avoid that in the future, state officials are seeking funding to expand the facility to accommodate blades as long as 150 meters. Read more.

Diehl wins, Doughty advances: Massachusetts Republicans held their state convention in Springfield on Saturday, endorsing Geoff Diehl, a big supporter of Donald Trump, as the party’s candidate for governor but also giving businessman Chris Doughty enough support to appear on the primary ballot. 

– Republican Gov. Charlie Baker did not attend the party’s convention and the candidates seeking to replace him never mentioned his name, even though he is very popular with voters and considered one of the most liked governors in the country.

Sumner shutdowns: Expect traffic delays as the state prepares to overhaul the Sumner Tunnel, which officials say is well beyond patches and repairs. The tunnel will be closed for four successive weekends and then shut down for four months next year. Read more

OPINION

Vicarious liability: Andy Metzger, a former reporter who is studying law at Temple University, said the ballot question seeking to classify app-based drivers as independent contractors could erase the “vicarious liability” of Uber, Lyft, GrubHub, and DoorDash. In other words, the companies couldn’t be held responsible legally if one of their drivers hits a pedestrian. Read more.

Housing Choice can work: Former state rep Eric Turkington says Falmouth is demonstrating how Gov. Charlie Baker’s Housing Choice legislation can work. Read more.

What’s taking so long? Mary Tamer of Democrats for Education Reform Massachusetts asks why it’s taking so long to spend the federal funds funneled to the state to help schools recover from COVID. Read more.

FROM AROUND THE WEB

MUNICIPAL MATTERS  

Springfield gets serious about cracking down on disruptive dirt bikes. (MassLive)

Quincy votes to build a municipal light plant, which would let the city own its own broadband infrastructure and create a municipal broadband network to provide a lower cost alternative to Comcast. (Patriot Ledger)

Boston city councilors were granted new powers over the city budget by voters in last year’s municipal election, but they are so far treading lightly when it comes to seizing that authority. (Boston Globe

ELECTIONS

Gubernatorial candidate Sen. Sonia Chang-Diaz calls for ending the state ban on rent control, after AG Maura Healey says she believes communities should be allowed to implement their own policies. (MassLive)

Andrea Campbell hit back at her Democratic rivals for attorney general, Shannon Liss-Riordan and Quentin Palfrey, who have hammered her over a super PAC that pushed her candidacy in last year’s Boston mayoral race, saying the super PAC has not spent any money in the AG’s race and she has no control over it anyway. (Boston Herald

BUSINESS/ECONOMY

Former Boston city councilor and acting mayor Kim Janey will helm Economic Mobility Pathways, a Boston nonprofit that aims to help poor people move up the economic ladder. (Boston Globe

Richardson’s ice cream’s sugar supplier misses a delivery, leading to a temporary shortage of Richardson’s ice cream at local stores. (Eagle-Tribune)

EDUCATION

Mental health workers at Worcester public schools say the need for mental health services among students far exceeds what existing staff can provide. (Telegram & Gazette)

Simone Ngongi-Lukula, the Education Equity Fellow at MassINC, the nonpartisan think tank that publishes CommonWealth, pens a Globe op-ed decrying the state’s abandonment of policies and programs to combat school segregation

Colleges are looking for new ways to promote diversity in their student bodies with two cases looming in which the more conservative Supreme Court could strike down affirmative action admission policies. (Boston Globe)  

ARTS/CULTURE

The Mohawk Theater in North Adams receives $200,000 in state funding for its facade and marquee, even though no plans are in place for what to do with the long-shuttered and decrepit facility. (Berkshire Eagle)

TRANSPORTATION

A man is hit and killed by an MBTA commuter rail train in Hanson on Sunday. (Patriot Ledger)

Of 200,000 road tests taken in Massachusetts last year, 60,000 were failed, around 31 percent. (MassLive)

ENERGY/ENVIRONMENT

The state and three local communities are in a standoff with National Grid over whether the utility is obligated to build a walkway along the Malden River as part of a construction project it carried out on property it owns along the  river in Malden. (Boston Globe