For state Rep. Dan Leonard, the coronavirus crisis feels a bit like “Groundhog Day,” the popular movie in which Bill Murray's weatherman character finds himself waking each morning to a repeat of Feb. 2. In Leonard's version, Indiana might be better prepared to weather its latest economic crisis than it was in 2008-'09, when an underfunded unemployment insurance fund left the state in dire straits.
“I guess I see us headed the same way, and I don't know if there's any way to stop it,” said the Huntington Republican. “I hope some of the fixes we did in 2011 will help draw that fund back up.”
Leonard was instrumental in helping manage Indiana's unemployment insurance crisis when the Great Recession hit. After building a $1.6 billion unemployment fund, lawmakers in 2001 had cut by 25% the unemployment tax rate assessed on businesses. Critics warned that reduced revenue would eventually create a shortfall, but pressure from employers to keep the tax rate low and from union officials to preserve benefits stymied efforts to make reasonable adjustments.
Then jobs began disappearing in 2008, and the fund was quickly depleted. Indiana was among the first states to take out a loan from the federal government's bailout package, eventually borrowing about $2.2 billion.
The state paid off the debt in 2015 and began to make its unemployment fund structurally sound. In the 2018 legislative session, Leonard authored a measure that now looks particularly wise.
“We had passed in 2011 legislation staying at the same level until the end of this year, then that freeze sunsetted and those premiums would have gone down considerably for employers,” he said in an interview last week. “I wanted to try and build that fund up even more. We're not going to make that under the current conditions, but we continued to freeze (employer payments) for another five years at the same rate. I honestly think employers weren't upset with that because they are paying the same rate they've been paying and it put some stability in the program. And even though it's more than they would have paid, it will help through this crisis.”
Skyrocketing unemployment claims were an immediate effect of the COVID-19 crisis. In Allen County alone, claims increased nearly 3,700% compared with the same week last year.
“A year ago, (Indiana) had roughly 3,000 claims on unemployment in a week,” Leonard said. “This past week we had 30,000 claims. The same staff that we've had geared to handling a3 to 3.5% unemployment rate now has to deal with 10 times the unemployment claims.”
Leonard, who said he has been in daily contact with state officials, said efforts to hire and train new employees are complicated by virus-related restrictions.
“I think (Gov. Eric Holcomb) is really busting his tail to come up with ways to help,” he said, noting work-search requirements and other rules removed by the governor's executive order. “It's a constant battle of people saying, 'Oh, you're just going overboard – there's not that many, it's not that big of a deal.' ... And then there's the people who realize it's really coming and the number of cases continue to go up and up and up.”
As Hoosiers wake to another economic disaster, the $2.2 trillion federal relief bill should ease pressure on Indiana's unemployment fund. But efforts Leonard and other lawmakers made to restore it a decade ago undoubtedly will make the latest Groundhog Day a bit less painful.