Rep John Damoose Sept 25, 2021

Rep. John Damoose, R-Harbor Springs, testifies on House Bill 5265 on Sept. 15, 2021. 

(The Center Square) – Democrats and Republicans agree the Unemployment Insurance Agency (UIA) screwed up when it asked roughly 700,000 people to retroactively pay back benefits it initially approved.

The House Oversight Committee and Rep. John Damoose, R-Harbor Springs, are crafting House Bill 5265 to hold those people harmless and shift the cost to taxpayers.

“The state of Michigan must not be in the position of bullying our residents over their own mistakes,” Damoose said.

The agency used wrong questions when determining whether roughly 700,000 people were eligible for benefits. The bill would add apply to improper payments as a result of an error by the UIA that occurred between March 12, 2020, and July 1, 2021. The state initially approved benefits for Michiganders and then retroactively billed them for as much as $27,000 while the UIA approved fraudulent benefits for people claiming to be “Kimberly Kardashian” and “Kylie Jenner.”

Rep. Stephanie Young, D-Detroit, pushed for ensuring the bill didn’t cover people who defrauded the UIA.

“I wish we could get these really smart hustlers real regular jobs. They’re smart people, just choosing to do the wrong thing,” Young said. “We’re gonna make certain they’re caught and held accountable, and that folks who did the right thing won’t have to suffer.”

Since March 15, 2020, Michigan has paid out $38.5 billion to 3.4 million claimants. The UIA doesn’t know how much of that was paid to fraudsters.

National Federation of Independent Businesses (NFIB) Assistant State Director Amanda Fisher supports the bill with changes.

“These claimants shouldn’t have to pay back benefits the agency said they could receive when they weren’t trying to commit fraud,” Fisher said.

She advocated for holding the unemployment trust fund harmless because it’s completely funded by employer contributions. If the trust fund paid for the UIA’s mistake, then businesses statewide would shoulder the burden instead of the entity that erred.

Fisher pushed for spending federal funds to deposit into the unemployment trust fund.

Fisher said over 10 years, businesses have paid more than $4 billion of debt via employment taxes that are now depleted.

“As long as you’re holding trust funds harmless, small business owners want to see their employees receive what they thought they were supposed to receive,” Fisher said.

Oversight Chair Rep. Steve Johnson, R-Wayland, estimated they could vote the bill out of committee next week.

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.