S 386

112th CONGRESS
1st Session

S. 386

To provide assistance to certain employers and States in 2011 and 2012, to improve the long-term solvency of the Unemployment Compensation program, and for other purposes.

IN THE SENATE OF THE UNITED STATES

February 17, 2011

Mr. DURBIN (for himself, Mr. REED, and Mr. BROWN of Ohio) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To provide assistance to certain employers and States in 2011 and 2012, to improve the long-term solvency of the Unemployment Compensation program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title- This Act may be cited as the `Unemployment Insurance Solvency Act of 2011'.

    (b) Table of Contents- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

      Sec. 2. Extension of assistance for States with advances.

      Sec. 3. Reduction in the rate of employer taxes.

      Sec. 4. Modifications of employer credit reductions.

      Sec. 5. Increase in the taxable wage base.

      Sec. 6. Voluntary State agreements to abate principal on Federal loans.

      Sec. 7. Rewards and incentives for solvent States and employers in those States.

SEC. 2. EXTENSION OF ASSISTANCE FOR STATES WITH ADVANCES.

    (a) In General- Section 1202(b)(10)(A) of the Social Security Act (42 U.S.C. 1322(b)(10)(A)) is amended by striking `2010' and inserting `2012' in the matter preceding clause (i).

    (b) Effective Date- The amendment made by this section shall take effect as if included in the enactment of section 2004 of the Assistance for Unemployed Workers and Struggling Families Act (Public Law 111-5; 123 Stat. 443).

SEC. 3. REDUCTION IN THE RATE OF EMPLOYER TAXES.

    (a) In General- Section 3301 of the Internal Revenue Code of 1986 is amended--

      (1) in paragraph (1), by striking `2010 and the first 6 months of calendar year 2011' and inserting `2013'; and

      (2) in paragraph (2), by striking `6.0 percent in the case of the remainder of calendar year 2011' and inserting `5.78 percent in the case of calendar year 2014'.

    (b) Effective Date- The amendments made by this section shall take effect on the earlier of--

      (1) the date of the enactment of this Act; or

      (2) July 1, 2011.

SEC. 4. MODIFICATIONS OF EMPLOYER CREDIT REDUCTIONS.

    (a) Limit on Total Credits- Section 3302(c) of the Internal Revenue Code of 1986 is amended--

      (1) in paragraph (1), by striking `90 percent of the tax against which such credits are allowable' and inserting `an amount equal to 5.4 percent of the total wages (as defined in section 3306(b)) paid by such taxpayer during the calendar year with respect to employment (as defined in section 3306(c))'; and

      (2) in paragraph (2)--

        (A) by striking subparagraphs (B) and (C) and the flush matter following subparagraph (C);

        (B) by striking `(2) If' and inserting `(2)(A) If';

        (C) by striking `(A)(i) in' and inserting `(i) in';

        (D) in clause (i) of subparagraph (A), as redesignated by subparagraph (C), by striking `5 percent of the tax imposed by section 3301 with respect to the wages paid by such taxpayer during such taxable year which are attributable to such State' and inserting `an amount equal to 0.3 percent of the total wages (as defined in section 3306(b)) paid by such taxpayer during the calendar year with respect to employment (as defined in section 3306(c))';

        (E) in clause (ii) of subparagraph (A)--

          (i) by moving such clause 2 ems to the left;

          (ii) by striking `5 percent, for each such succeeding taxable year, of the tax imposed by section 3301 with respect to the wages paid by such taxpayer during such taxable year which are attributable to such State;' and inserting `an amount equal to 0.3 percent of the total wages (as defined in section 3306(b)) paid by such taxpayer during the calendar year with respect to employment (as defined in section 3306(c)), for each succeeding taxable year;'; and

          (iii) by striking the semicolon at the end and inserting a period; and

        (F) by adding at the end the following new subparagraph:

      `(B) The provisions of subparagraph (A) shall be applied with respect to the taxable year beginning January 1, 2011, or any succeeding taxable year by deeming January 1, 2013, to be the first January 1 occurring after January 1, 2010. For purposes of subparagraph (A), consecutive taxable years in the period commencing January 1, 2013, shall be determined as if the taxable year which begins on January 1, 2013, were the taxable year immediately succeeding the taxable year which began on January 1, 2010. No taxpayer shall be subject to credit reductions under this paragraph for taxable years beginning January 1, 2011, and January 1, 2012.'.

    (b) Definitions and Special Rules- Section 3302(d) of the Internal Revenue Code of 1986 is amended--

      (1) by striking paragraphs (1), (4), (5), (6), and (7); and

      (2) by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively.

    (c) Effective Date- The amendments made by this section shall take effect as if enacted on January 1, 2011.

SEC. 5. INCREASE IN THE TAXABLE WAGE BASE.

    (a) In General- Section 3306 of the Internal Revenue Code of 1986 is amended--

      (1) in subsection (b), by striking `$7,000' both places it appears and inserting `the applicable wage base amount (as defined in subsection (v)(1))'; and

      (2) by adding at the end the following new subsection:

    `(v) Applicable Wage Base Amount-

      `(1) IN GENERAL- For purposes of subsection (b)(1), the term `applicable wage base amount' means--

        `(A) for a calendar year before calendar year 2014, $7,000;

        `(B) for calendar year 2014, $15,000; and

        `(C) for calendar years beginning on or after January 1, 2015, the amount determined under paragraph (2).

      `(2) AMOUNT FOR CALENDAR YEAR 2015 AND THEREAFTER-

        `(A) AMOUNT-

          `(i) IN GENERAL- For purposes of paragraph (1)(C), the amount determined under this paragraph for a calendar year is an amount equal to the product of--

            `(I) the amount of average wage growth for the year (as determined in accordance with subparagraph (B)); and

            `(II) the applicable wage base amount for the preceding calendar year.

          `(ii) ROUNDING- If the amount determined under clause (i) is not a multiple of $100, such amount shall be rounded to the next higher multiple of $100.

        `(B) AVERAGE WAGE GROWTH-

          `(i) IN GENERAL- For purposes of subparagraph (A), the amount of annual wage growth for a calendar year shall be determined by dividing the average annual wage in the United States for the 12-month period ending on the June 30 of the preceding calendar year by the average annual wage in the United States for the 12-month period ending on the second prior June 30, and rounding such ratio to the fifth decimal place.

          `(ii) AVERAGE ANNUAL WAGE- For purposes of clause (i), using data from the Quarterly Census of Employment and Wages (or a successor program), the average annual wage for a 12-month period shall be determined by dividing the total covered wages subject to contributions under all State unemployment compensation laws for such period by the average covered employment subject to contributions under all State unemployment compensation laws for such period, and rounding the result to the nearest whole dollar.'.

    (b) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 6. VOLUNTARY STATE AGREEMENTS TO ABATE PRINCIPAL ON FEDERAL LOANS.

    (a) In General- Section 1203 of the Social Security Act (42 U.S.C. 1323) is amended--

      (1) by inserting `(a) Advances- ' after `1203'; and

      (2) by adding at the end the following new subsection:

    `(b) Voluntary Abatement Agreements-

      `(1) IN GENERAL- The governor of any State that has outstanding repayable advances from the Federal unemployment account pursuant to subsection (a) may apply to the Secretary of Labor to enter into a voluntary principal abatement agreement.

      `(2) CONTENTS OF APPLICATION- An application described in paragraph (1) shall include a plan that, based upon reasonable economic projections, describes how the State will, within a reasonable period of time--

        `(A) repay the outstanding principal on its remaining advance to the Federal unemployment account, less the amount of the principal abatement pursuant to paragraph (4); and

        `(B) restore the solvency of the State's account in the Unemployment Trust Fund to an average high cost multiple of 1.0, as calculated and defined by the United States Department of Labor.

      `(3) REQUIREMENT FOR PLAN- A plan described in paragraph (2) shall be premised on the existing unemployment compensation law of the State and may take into consideration the enactment of any changes in law scheduled to become effective during the life of the plan.

      `(4) AGREEMENT- Upon review of the application and satisfaction that the State's plan will meet the repayment and solvency goals described in paragraph (2), the Secretary of Labor may enter into a principal abatement agreement with the State. Such an agreement shall be for a period of no more than 7 years.

      `(5) CALCULATION- Under any voluntary abatement agreement under this subsection, the amount of principal abatement shall be calculated as follows:

        `(A) The State's repayable advances as of the date of the enactment of this subsection or December 31, 2011, whichever is earlier, shall be multiplied by a loan forgiveness multiplier.

        `(B) The State's loan forgiveness multiplier shall be calculated on the same basis as the temporary increase of Medicaid FMAP under section 5001(c)(2)(A) of division B of the American Recovery and Reinvestment Act of 2009, using the State's additional FMAP tier as of December 31, 2010. In the case of a State that meets the criteria described in--

          `(i) clause (i) of such section 5001(c)(2)(A), the loan multiplier shall be 0.2;

          `(ii) clause (ii) of such section 5001(c)(2)(A), the loan multiplier shall be 0.4; and

          `(iii) clause (iii) of such section 5001(c)(2)(A), the loan multiplier shall be 0.6.

        `(C) The annual amount of principal abatement shall equal one-seventh of the total amount of principal abatement.

      `(6) CERTIFICATION- Under any voluntary abatement agreement under this subsection, the State shall certify that during the period of the agreement--

        `(A) the method governing the computation of regular unemployment compensation under the State law of the State will not be modified in a manner such that the average weekly benefit amount of regular unemployment compensation which will be payable during the period of the agreement will be less than the average weekly benefit amount of regular unemployment compensation which would have otherwise been payable under the State law as in effect on the date of the enactment of this subsection;

        `(B) State law will not be modified in a manner such that any unemployed individual who would be eligible for regular unemployment compensation under the State law in effect on such date of enactment would be ineligible for regular unemployment compensation during the period of the agreement or would be subject to any disqualification during the period of the agreement that the individual would not have been subject to under the State law in effect on such date of enactment;

        `(C) State law will not be modified in a manner such that the maximum amount of regular unemployment compensation that any unemployed individual would be eligible to receive in a benefit year during the period of the agreement will be less than the maximum amount of regular unemployment compensation that the individual would have been eligible to receive during a benefit year under the State law in effect on such date of enactment; and

        `(D) upon a determination by the Secretary of Labor that the State has modified State law in a manner inconsistent with the certification described in the preceding provisions of this paragraph or has failed to comply with any certifications required by this paragraph, the State shall be liable for any principal previously abated under the agreement.

      `(7) TRANSFER- Under a voluntary abatement agreement under this subsection, a transfer of the annual amount of the principal abatement shall be made to the State's account in the Unemployment Trust Fund on December 31st of the year in which the agreement is executed so long as the State has complied with the terms of the agreement. For each subsequent year that the Secretary of Labor certifies that the State is in compliance with the terms of the agreement, the annual amount of the State's principal abatement will be credited to its outstanding loan balance. If the loan balance reaches zero while the State still has a remaining principal abatement amount, the remaining amount shall be made as a positive balance transfer to the State's account in the Unemployment Trust Fund.

      `(8) REGULATIONS- The Secretary of Labor shall promulgate such regulations as are necessary to implement this subsection. Such regulations shall include--

        `(A) standards prescribing a reasonable period of time for a State plan to reach a solvency level equal to an average high cost multiple of 1.0, taking into account the economic conditions and level of insolvency of the State; and

        `(B) guidelines for insuring progress toward solvency for States with agreements that include plans that require more than 7 years to reach an average high cost multiple of 1.0.'.

    (b) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 7. REWARDS AND INCENTIVES FOR SOLVENT STATES AND EMPLOYERS IN THOSE STATES.

    (a) Increased Interest for Solvent States-

      (1) IN GENERAL- Section 904(e) of the Social Security Act (42 U.S.C. 1104(e)) is amended by adding at the end the following new flush sentences:

    `The separate book account for each State agency shall be augmented by 0.5 percent over the rate of interest provided in subsection (b) when the State maintains reserves in the account that equal or exceed an average high cost multiple of 1.0 as defined by the Secretary of Labor as of December 31st of the preceding year. The State may apply the additional funds to support State administration pursuant to the requirements in section 903(c).'.

    (b) Lower Rate of Tax for Solvent States-

      (1) IN GENERAL- Section 3301 of the Internal Revenue Code of 1986, as amended by section 3, is amended by adding at the end the following new sentence: `For the second 6-month period of 2011 or for each calendar year thereafter, in the case of a State that maintains reserves in the State's separate book account that equal or exceed an average high cost multiple of 1.0 as of December 31st of the year preceding the period or year involved, paragraph (1) shall be applied for such period or year in the State by substituting `6.0 percent' for `6.2 percent' or, as the case may be, paragraph (2) shall be applied for such period or year in the State by substituting `5.68 percent' for `5.78 percent'.'.

      (2) EFFECTIVE DATE- The amendment made by this subsection shall take effect on the earlier of--

        (A) the date of the enactment of this Act; or

        (B) July 1, 2011.

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