A win-lose proposition – Recent Congressional refusal may not help many people, but it will help the city’s budget

July 8, 2010
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When the U.S. Congress refused to extend unemployment benefits any further last week, there might have been a muted celebration from the City Hall.

Congress has extended unemployment benefits several times over the last two years, with the latest extension coming earlier this year – adding a total of 99 weeks for claims. Normally unemployment claims in Massachusetts last 30 weeks.

While those extensions have been helpful to some, it has meant extra money in the city’s budget due to a loophole in the law that requires cities and towns to pay 100 percent of those extensions, while private companies get a 50-50 split via federal Stimulus dollars.

“The one entity excluded from that are local government bodies,” said Mayor Tom Ambrosino. “We pay 100 percent of our unemployment claims and the federal government picks up 50 percent of the claims for everyone else.”

Each state has its own unemployment program that kicks in when their unemployment rate reaches a certain level. Most state programs are for an additional 13-20 weeks and the costs are shared with the federal government. The one exception, though, is that federal funding is not provided under the state extended benefits program to local government entities. Therefore, local governments are responsible for 100 percent of these charges.

Last week, though, before leaving for the July 4th holiday, Congress failed to extend unemployment benefits again – and the only thing positive about it might be the unemployment line item in the city’s budget.

“My position is they ought to extend the benefits,” said Mayor Tom Ambrosino. “I’m a supporter of extended benefits. We will be able to handle these added charges better than an unemployed person will be able to handle cancellation of benefits.

“However, in a perfect world, if they’re providing benefits to private entities, I don’t know why it shouldn’t be extended to government entities just the same,” he added.

So, while everyone else is on the hook for 50 percent of the costs, the city’s taxpayers bear 100 percent of the unemployment costs.

This past year, Ambrosino said they budgeted far more than ever before – though it is small potatoes in regards to the entire budget. The budget for unemployment benefits – mostly due to the extensions – was more than $100,000. Fortunately, the account did run a surplus because many of those laid off by the city found new jobs quickly.

This coming year, the unemployment budget is down to $50,000 – which is still higher than normal. The School Department costs are much higher in this area, said the mayor.

The situation is the result of an odd loophole in the system that no one can really explain at the moment.

And, even though this has been brought to the attention of the local Congressional delegation, the mayor said he doesn’t anticipate any changes.

“It’s going to be hard for Congress to do anything differently that would add to the deficit,” he said.

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