MADISON — The city of Madison’s gaming of federal unemployment funding to help fix its budget problems is a perfect example of the left’s maxim, “You never want a serious crisis go to waste.”
The city certainly wouldn’t have tried to work the state Work-Share program without the largess in federal funding created in response to the pandemic.
As Empower Wisconsin first reported, Madison Mayor Satya Rhodes-Conway has asked city employees to take partial layoffs through the state’s eight-year-old Work-Share program. They could then collect unemployment that is 100 percent paid for through federal tax dollars as part of extended COVID -19 relief.
The benefits “in most cases, make up for the reduced payroll hours,” a city document states. In some cases, city employees will earn more than they’re currently making, thanks to the $300 per week federal supplement available through March 14.
Rhodes-Conway has made it clear the federal windfall would help the big-spending city out of a fiscal bind.
“After discussions with employee associations, the Mayor directed all eligible agencies to use Work-Share to help fill the projected $1.2M City of Madison budget gap,” a city document states.
While local governments are eligible, Work-Share program experts say the public entities probably wouldn’t have applied for it during a “regular recession.” That’s because, unlike private employers that have to pay quarterly into the state Unemployment Insurance fund based on a formula, governments and non-profits are exempt. Instead, they are under a pay-as-you go system, meaning they have to pay the fund for the benefits received by each employee laid off at the time.
So it’s normally a disincentive for governments to layoff their public employees. That was, until the federal COVID relief package picked up 100 percent of unemployment benefits for entities participating in Work-Share programs. When the relief rolled out last spring, the federal government also offered a $600 weekly bonus payment to those taking partial layoffs.
And Madison was among the first at the federal funding trough.
Facing a $30 million budget shortfall in late May, the city sought approval from Gov. Tony Evers’ state Department of Workforce Development to join the Work-Share program.
The additional payment is $300 per week for the extended version of federal relief, passed in December, so the sweetener is not as sweet. It’s not clear how many city employees are taking advantage of the city’s budget fix this time around. A city official has not returned Empower Wisconsin’s request for comment.
The University of Wisconsin athletic department sought state approval for about 350 employees to participate in the Work-Share program. It was slated to run from May 18 through July 25. The department was looking to save approximately $2.8 million as the pandemic closed off a big source of revenue for the big budget UW Badgers sports programs.
A legislative source tells Empower Wisconsin he’s surprised more local governments didn’t take advantage of the program, now that they can use the money to help fill their budget holes — even if that wasn’t the intent of the federal law.
Relatively few have applied for Wisconsin’s Work-Share program since its creation in 2013.
“There was never really been a real incentive for employers to do it. Hardly anyone was using it. I’d say less than 10,” one source said.
Now, there’s plenty of incentive for big-spending cities like Madison to feast at the federal tax dollar trough. And it’s likely the $1.9 trillion “stimulus” bill proposed by congressional Democrats will extend the generous federal funding for Work-Share programs.
Will Wisconsin lawmakers save taxpayers from local and state governments grabbing up tax money to get around making tough budget decisions?