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HARRISBURG, PA, Sept. 20, 2010 – The framework of any unemployment compensation discussion should be based on slowing the growth of the UC Trust Fund and bringing more equity to the system, not permanently expanding benefits, the Pennsylvania Chamber of Business and Industry said today.

PA Chamber Government Affairs Director Sam Denisco said proposed legislation (H.B. 2400) that would allow Pennsylvania to draw down a one-time payment of $273 million from the federal government would require a permanent expansion of UC benefit eligibility – benefits that the Commonwealth would have to pay for long after the stimulus money runs out.

“One must question the wisdom of increasing the cost of Pennsylvania’s unemployment compensation system at a time when it’s operating on three billion dollars borrowed from the federal government,” Denisco said. “And the amount of that indebtedness continues to grow.”

Denisco said borrowing will continue with a projected loan balance through 2017 of more than $7 billion. To make matters worse, the federal UC account from which loans are obtained is likewise in deficit, as is the federal budget.

“Every additional dollar paid out from Pennsylvania’s UC Trust Fund ultimately increases the national debt,” he said. “Stopping this cycle will require a multi-pronged solution. House Bill 2400, however well intended, only adds to the problem of ensuring that the UC system is sustainable and there for those in need.”

As a member of the state’s UC Advisory Council, the PA Chamber has been working in good faith with the administration and labor groups to address the solvency concerns facing the UC system.

Business has put a responsible proposal on the table, one that spreads the burden of the UC Trust Fund debt, including higher taxes for employers; proposes commonsense reforms that will rein in future costs; and preserves benefits for current recipients.

“Pennsylvania must take steps to restore balance, fairness and sound financial principles to a system that today offers none of the above,” Denisco said. “House Bill 2400 would further jeopardize the long-term sustainability of a UC system that must be there for employees who are out of work due to no fault of their own.”

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.