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Bill seeking to cut Montana unemployment eligibility to 20 weeks clears Appropriations Committee

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Bill seeking to cut Montana unemployment eligibility to 20 weeks clears Appropriations Committee

Mar 18, 2023 | 11:59 am ET
By Blair Miller
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Bill seeking to cut Montana unemployment eligibility to 20 weeks clears Appropriations Committee
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The Montana state Capitol in Helena on Jan. 2, 2023. (Photo by Blair Miller, Daily Montanan)

Great Falls Republican Rep. Steven Galloway’s bill to cut Montana unemployment eligibility from 28 weeks to 20, which he says will allow business owners to pay their employees more rather than paying into the unemployment insurance trust fund, saw one of the shortest Appropriations hearings of the session Thursday.

No one testified as proponents, opponents, or informational witnesses on the fiscal note for House Bill 652 in a hearing that lasted under two minutes – though the hearing got underway ahead of the committee’s originally scheduled start time.

The bill passed the committee Friday in a 16-7 party-line vote, with Democrats opposed. Rep. Emma Kerr-Carpenter, D-Billings, said some opponents could not testify at Thursday’s hearing because of the “frenetic schedule” of the committee and said she would vote against the bill over concerns it would be “administratively burdensome” while not giving as much benefit to the state as Galloway purported.

In Thursday’s hearing, Galloway, himself a business owner, pointed to the $7.4 million in the next fiscal year that the fiscal note says will stay with business owners instead of being paid into the state’s unemployment trust fund – the fund used to pay out unemployment benefits to Montanans.

“That money can go into an employer’s bank and then be able to pay the employees that are showing up for work,” he said.

Galloway’s bill seeks to cut the number of weeks Montanans are eligible for unemployment benefits each year to 20 from 28 starting July 1.

While some proponents of the bill noted during its initial committee hearing Montana currently had the longest eligibility period for people to receive unemployment in the nation, opponents said the proposed change would put it below 40 states – including nearly every Western state – which offer 26 weeks of eligibility. Idaho offers up to 21 weeks of benefits.

The fiscal note from the Governor’s Office of Budget and Program Planning forecasts the measure would add between $7.4 million and $8.3 million to the unemployment insurance trust fund in each of the next four fiscal years.

It assumes based on prior data that around 4.1% of benefits paid out come from people’s claims beyond 20 weeks.

Montana Department of Labor and Industry data shows the trust fund had around $467.7 million dollars in it as of the end of last June – around $77 million more than the June prior, when federal pandemic benefits were still being paid out.

Republican Gov. Greg Gianforte on Thursday touted the state’s 2.5% January unemployment rate as a success and chalked it in part up to his administration’s “pro-business, pro-growth, pro-jobs agenda.”

HB652 received favorable testimony in the House Business and Labor Committee in late February from pro-business groups as well as Galloway, who said they felt some people were staying on unemployment rather than trying to fill Montana’s 40,000 job vacancies. Galloway said the current 28 weeks of benefits “penalizes” the Montana workforce and employers “who need more workers.”

“To find new work, Montana’s workforce shortage can be solved in part by scaling down benefit duration, which incentivizes workers to return to work more quickly,” Galloway told the committee.

Montana Department of Labor and Industry Chief of Staff John Elizandro testified that Commissioner of Labor and Industry Laurie Esau and the department believed reducing the number of unemployment benefit weeks offered would “incentivize those folks to go back into the workforce and take jobs” and keep unemployment taxes lower for employers. He said the department believes the bill is a “prudent, responsible measure.”

During the bill’s second reading on the House floor on March 2, Republicans spoke in favor of it, saying if there is an economic downturn, the state can still offer extended benefits beyond 20 weeks, as is noted in the fiscal note. Rep. Jerry Schillinger, R-Circle, argued that some people in specific industries waiting for jobs to open back up “could learn how to flip a burger or flag a piece of equipment for a few weeks while they’re waiting.”

Opponents in the committee hearing, including union and trade representatives, said they felt moving to 26 weeks would be acceptable to bring Montana in line with most other states and that a better way to address any workforce shortages was to find other incentives, like better child care and family leave options for workers.

Al Ekblad, representing Operating Engineers Local 400, said Montana’s current unemployment rate was already below the national average and what is considered a normal level, and that its labor force participation rate of 62% was 10 points above the national average.

“When you look at these numbers and you decide that you’re going to motivate people to go back into the workforce by cutting a benefit they may or may not use, it seems a little counterproductive to me,” he said.

Both in the committee hearing and when the bill was heard on second reading in the House, people who testified and Democratic lawmakers said moving the number of eligible weeks to 20 would have outsized impacts on boom-or-bust economies in rural Montana, where recently several large mills and plants have closed, as well as on people who are using unemployment benefits from their last job to attend longer training programs, like diesel mechanic school, to boost their skills for a new career.

“[Unemployment is] not to get into any job; it’s to give workers the opportunity to find employment that is suitable and ideally commensurate with their former salary,” said Amanda Frickle, representing the Montana AFL-CIO, at the committee hearing. “That’s how families foreclose on their homes, is when they’re just forced into jobs that don’t pay the bills.

During the House floor discussion, Rep. Jennifer Lynch, D-Butte, said she did not understand why Montana needed to cut the benefit weeks if less than 5% of claimants were receiving benefits beyond 20 weeks. A fellow Democrat agreed.

“I think the vision we have of a bum sitting on their couch, drinking state-sanctioned beer, is not who we are really dealing with,” said Rep. Eric Matthews, D-Bozeman, arguing that he felt most of the people claiming benefits beyond 20 weeks were attending training programs. “We’re dealing with Montanans that are trying to improve their lives and have a better future.”

The measure passed its second House reading in a 67-33 vote. After passing the House Appropriations Committee on Friday, the bill will be scheduled for a third reading in the House before moving over to the Senate should it pass.

Correction: This story has been updated to note the bill would add between $7.4 million and $8.3 million to the trust fund in each of the next four years, not subtract from it.