State officials warn that legislation to require drug testing for all people applying for unemployment benefits conflicts with federal rules and law and could cost the state millions of dollars of federal funding and force a huge tax increase on Arizona employers.
The bill's sponsor, Republican Sen. Steve Smith, says he doesn't think all that would come to pass and that the state should do what it can to make sure that people receiving taxpayer benefits are fit to work.
"I look at unemployment benefits as a job," Smith said. "We just want to make sure we're not paying for deadbeats."
Other lawmakers aren't so sure, and one plans to change Smith's bill so that its requirement for blanket testing of applicants would only be implemented if the state wouldn't be hit with federal penalties that harm employers.
Smith's bill and similar proposals in several other states are being offered at a time when Republicans are moving to tighten eligibility for various public benefits such as welfare.
However, as in Arizona, they often bump into political and legal obstacles that limit what they can do.
Nationally, congressional Republicans recently tried but failed to win approval for states to require applicants for unemployment benefits to take a drug test.
Instead, Congress in February approved a law that allows states to make benefit applicants take drug tests only if they lost their job because they failed an employer's drug test or are applying for a job that requires one.
Indiana already has a law barring unemployment benefits for people who fail or refuse a drug test given by an employer, and Arizona legislation to adopt the failed-test eligibility change has been approved by the state House and awaits action by the full Senate.
Meanwhile, Smith's broader bill for blanket testing has been approved by the Senate and is being considered by the House.
However, the U.S. Department of Labor has told the state that blanket testing of applicants for unemployment benefits wouldn't be permitted under federal rules and law.
That's because it would create an eligibility criteria not related to the person's loss of work, the Labor Department said in a letter to the state agency that runs the program.
The letter also cited "issues" with the proposed requirement that jobless people pay for the tests and the lack of an appeals process.
The Arizona Department of Economic Security said the federal agency's stance means Arizona's federally funded unemployment benefits program would out of compliance with federal requirements. And that would cost the state more than $27 million in federal funding, forcing the state to pick up the tab, the state agency said.
And employers would lose the steep discount they now get on their unemployment benefit taxes, increasing a business' per-worker annual cost from $42 to $420, the state agency said.
House Appropriations Chairman John Kavanagh, R-Fountain Hills, said he supports Smith's proposal but can't risk losing the employers' tax discount.
Kavanagh said he plans to amend the bill to hinge implementation on whether a court rules that a drug testing requirement is permitted under federal law.
Kavanagh said he believed a challenge to a blanket testing requirement is already pending in another state, but an expert on unemployment benefits law said that's not so.
The proposed Arizona legislation for drug testing when there isn't a reason to suspect an individual is using drugs would be the first such state law enacted nationally and would be plainly illegal under federal law, said Maurice Emsellem, policy co-director of the National Employment Law Project, a liberally oriented New York-based advocacy group.
"It's obviously out of compliance," he said. "The law is very clear."
Legislation to require drug tests in order to get unemployment benefits has also been proposed in this year Georgia, Iowa, Oklahoma and South Carolina, according to a National Conference of State Legislatures database. Some of the bills would provide for random testing of recipients while other would require testing for all applicants.
The Arizona bill's provision to make the applicant pay for drug testing would needlessly burden jobless people who are struggling to keep food on the table and treat them "as if they're some kind of criminal," said Sen. Leah Landrum Taylor, D-Phoenix.
"And why? It could literally be a person that has never touched a drug in their lives," she said.