Caught between its own shrinking workforce and fast-rising unemployment on St. Croix from Hovensa refinery’s partial closure, the Labor Department is stretched very thin, but there is some good news amid the bad, Labor Commissioner Albert Bryan told the Legislature during budget hearings Monday.
Bryan was before the Senate Finance Committee in Frederiksted to discuss Labor’s 2012-13 budget appropriation request of $6.2 million, with $4.5 million from the General fund and $1.8 million from the Government Insurance Fund.
Federal and local nonappropriated local funds total $8.7 million, for a combined $14.9 million projected to flow through the department in Fiscal Year 2012-13.
That is $2.3 million less than the FY 11-12 total and a $1 million reduction in its General Fund appropriation. It represents a 25 percent decrease in funding and staffing at Labor over the past two years, Bryan said.
"Our locally funded programs such as the Divisions of Labor Relations, Planning Research and Monitoring, and Hearings and Appeals are barely surviving," he said. "The Hearing and Appeals unit has especially been hard hit because of the increase in the filing of unemployment insurance appeals.”
Bryan continued, “Even federally funded programs are being funded at lower levels because of the recession and at some point the local government may have to supplement our federal dollars if we are going to continue to provide such critical programs and services as unemployment insurance, job service training and occupational safety and health."
Meanwhile with Hovensa and its contractors laying off most of their employees, Bryan said, "We are now seeing the beginning effects as the unemployment rate in the V.I. climbed from 8.2 percent in January to 12.2 percent in May."
"While this jump was significant, the unemployment rate in St. Croix jumped 5 percent to 14.6 percent and it is expected that it will be 17 to 18 percent before the end of the calendar year," he said.
Labor’s Unemployment Insurance division will have about 5,000 claims in a normal year, but "we have seen over 4,000 claims in the first six months of the year," Bryan said. This is straining staff, but equally important, it is accelerating the pace at which the territory is borrowing from the federal Unemployment Trust Fund to pay the first 26 weeks of benefits.
The loan’s balance just reached $36.5 million, with an interest payment of $800,000 due in September, he said.
Funding ultimately comes from employers, but the territory reduced the Unemployment Insurance Tax when times were better, he said. "This is a debt of the territory’s employers and not the government," Bryan said, urging the Legislature to revise the tax and institute a $25 per employee annual levy to bring the system back into balance.
Summer youth employment programs are getting under way, with 1,625 application and 317 placed with jobs so far.
"The summer program was a struggle this year as we have had so many applicants and so little opportunities."
In a bit of good news, Labor was awarded a $7.8 million National Emergency Grant it applied for through the U.S. Labor Department. The grant funds job training and support, with $3.8 million to be spent in the first year, he said. The money can only be used for Hovensa and contractor employees directly affected by the refinery closure.
In other small notes of good news, Labor has moved all its St. Croix offices into a single energy-efficient site, that is reducing its $150,000 per year St. Croix electric bill by 66 percent, according to Bryan.
No votes were taken at the information-gathering hearing.
