[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[Extensions of Remarks]
[Page 27529]
[From the U.S. Government Publishing Office, www.gpo.gov]



      THE EMPLOYMENT SECURITY ADMINISTRATIVE FINANCING ACT OF 1999

                                 ______
                                 

                            HON. JIM McCRERY

                              of louisiana

                    in the house of representatives

                       Thursday, October 28, 1999

  Mr. McCRERY. Mr. Speaker, I rise today, on behalf of myself and 
Representatives Boehner, Shaw, Herger, Baker, Ramstad, Sununu, Bachus, 
LaTourette, Oxley, Collins, Portman, Watkins, Hayworth, McInnis, Lewis, 
Pryce, Traficant, Sessions, Chambliss, Dickey, Cubin, and Hansen, to 
introduce the Employment Security Administrative Financing Act of 1999.
  As you know, the employment security system, established as a 
federal-state partnership more than 60 years ago, is the system 
employers use to provide unemployment insurance and a public labor 
exchange for workers. Since its inception, major structural changes to 
our country's economy have taken place as a result of rapid 
technological advances and the growth of globalized trade and 
investment. Adjusting to meet the demands of our changing economy, our 
nation's labor market has fundamentally changed as well. Therefore, the 
employment security system should be reformed to meet the demands of 
the changing labor market and to ensure that states are able to provide 
the services necessary for employment and re-employment services aimed 
at matching employers and qualified job-seekers.
  Mr. Speaker, a major focus of reform should be to improve the 
efficiency of the current administrative financing mechanism and to 
reduce the tax burden imposed on employers. Administration of the 
employment security system is financed by employers through the Federal 
Unemployment Tax Act (FUTA) payroll tax. Currently collected by the 
IRS, FUTA revenue is returned to the states through an annual 
appropriation allocated by the Department of Labor. Unfortunately, 
states aren't receiving a proportionate return on the FUTA dollars 
contributed by their employers. Since 1990, less than 59 cents of every 
FUTA dollar has been sent back to the states for the purpose of 
administering their unemployment system, and the percentage is 
shrinking. Now less than 52 cents is returned. As a result, states are 
being forced to either make up for the shortfall from their own general 
funds, impose new payroll taxes, or cut back on services provided to 
workers.
  Mr. Speaker, the Employment Security Administrative Financing Act is 
designed to address the problems that the current system continues to 
impose on the states and the FUTA taxpayers, while preserving and 
strengthening protections for workers. Specifically, the bill would: 
reduce the tax burden on large and small businesses by repealing the 
unnecessary, ``temporary'' 0.2% FUTA surtax imposed in the 1970's; 
eliminate inefficiencies experienced by employers by transferring 
responsibility for collection of the FUTA tax to the states; strengthen 
administration of the system by ensuring that states get a greater 
return on their employers' FUTA tax dollars and ensure greater 
accountability for the use of these funds; improve employment services 
with an emphasis on re-employing dislocated workers; combat fraud and 
abuse in the present system; and, increase state flexibility to 
administer their unemployment insurance and employment services 
programs to serve local needs.
  Mr. Speaker, without these reforms, the current system will continue 
to overtax and overburden employers, shortchange states, and, most 
importantly, underserve those who need it most--the involuntarily 
unemployed and those striving to move up the career ladder.
  Mr. Speaker, this is an important issue that Congress should 
consider. I look forward to working with others to bring about these 
much-needed, common sense reforms to the current system that will bring 
our employment security system into the 21st Century.

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