The measure was passed by a 34-13 vote split along partisan lines. The plan also reduces the amount employers would have to pay to tackle a $736 million debt the state owes on federal funds used to pay unemployment benefits in recent years.
The proposal would repay that debt by 2014 and replenish the state's unemployment trust fund by 2016 to $1.1 billion. Supporters argued the plan was painful but necessary, and shared the burden among businesses, the unemployed and the state.
While Democrats agreed action was necessary to repay the debt, several blasted the plan as potentially unconstitutional and harmful to the unemployed.