Missouri House votes to forgive federal unemployment overpayments
A bipartisan agreement on forgiving unemployment overpayments dissolved Thursday in the Missouri House on the issue of how fast the relief should be available.
After voting 157-3 to send the bill allowing waiver of almost $109 million in overpayments to the state Senate, Democrats split from Republicans on whether they believe promises from the Missouri Department of Labor and Industrial Relations that it will pause collection actions.
By a vote of 51-106, the House removed an emergency clause from the bill that would make it effective as soon as it is signed by Gov. Mike Parson or enacted over a veto.
The sponsor, state Rep. J. Eggleston, R-Maysville, urged members to defeat the emergency clause because the department said it won’t be ready to accept waiver applications that quickly.
Bills passed by lawmakers take effect 90 days after they adjourn unless two-thirds of the members of both bodies agree it is an emergency. As the bill will arrive in the Senate, the effective date would be Aug. 28.
Eggleston said he was skeptical about the request from the department to remove the emergency clause because Parson, who could waive the debt without legislation, has refused to do so.
The overwhelming support for the bill has changed the attitude, he said, but he wasn’t ready to back off on quick action until he received assurances about collections.
He then read an email he received Thursday: “The Department of Labor is working to pause collections as you have requested,”
That wasn’t reassuring to state Rep. Doug Clemens, D-St. Ann, who said that a constituent has already seen a federal tax refund intercepted to recover overpayments. He noted that he has been working on starting a diet for three years.
“We need to move forward with the emergency clause,” he said. “I am concerned that on Aug. 28, they will still be working on pausing.”
Almost 1.1 million Missourians have filed claims for unemployment since the first case of COVID-19 was reported in the state on March 7, 2020. More than half those claims, 639,000 were filed between March 7 and May 6, 2020, when most state and local stay-at-home orders were in effect.
When Congress passed the $2.2 trillion CARES Act in March 2020 to alleviate economic disruption due to COVID-19, it included a $600 per week supplement to regular state unemployment benefits.
Missouri’s regular unemployment program has a maximum benefit of $320 per week.
The CARES also included programs to assist workers not covered by regular unemployment.
The rationale for both the supplement and the additional programs was that massive job losses and business closures made it difficult to find new jobs to replace lost income. Most states, including Missouri, waived the required job search for a portion of the year.
There were other supplemental payments when the CARES Act supplement expired at the end of July and currently people receiving unemployment receive a $300 federal supplement.
In all, the state processed about $5 billion in payments through the unemployment system.
Letters began going out in the fall, informing some people who were paid benefits that they were not eligible for the money they received and it must be paid back. Parson at first was adamant that he would not accept federal permission to waive overpayments that resulted from mistakes by the labor department or because people innocently thought they qualified.
The bill passed Thursday would allow the department, on a case-by-case basis, to waive repayment of the federal benefits but does not relieve debt for overpayments from the state fund.
Relief for that debt is another source of disagreement between Republicans and Democrats.
Because the state unemployment fund comes from taxes on a portion of employer payrolls, Republicans said they are worried that keeping the fund strong will require higher taxes if the debt is forgiven.
“It would be irresponsible of us to waive the state portion, because if we do that we would then be saddling that debt on small businesses in this state,” state Rep. Jered Taylor, R-Republic, said.
State Rep. Ian Mackey, D-St. Louis, said news of the bill’s passage will give people a false impression that they are free of unemployment debt.
“A few weeks later they are going to get a bill from the state for $800 and the same people who could not afford the $5,000 bill are going to be unable to afford the $800,” he said.
During a special legislative session in November to appropriate remaining state CARES Act funds, state Budget Director Dan Haug said any money unspent by Dec. 30, estimated at $400 million or more, would be deposited into the state unemployment fund.
If that was possible, state Rep. Peter Merideth, D-St. Louis said, there should be a way to use CARES Act funds to replace state unemployment debt.
“We can fix this with CARES Act money,” Merideth said. That would “make sure that nobody is paying for the mistakes of the government.”
Republicans are open to a state waiver if it does not mean a tax increase.
“If this bill were to come back from the Senate with the state portion included and we were able to fund with CARES Act funding…that is something I would personally be in favor of,” said state Rep. Scott Cupps, R-Shell Knob.
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