A key panel on Capitol Hill voted Wednesday to support doing away with cuts in unemployment benefits for Utah senior citizens who also collect Social Security retirement checks.

But instead of making Utah employers pay for the change, legislators are urging a $3 reduction in the weekly benefits of all the state's unemployment insurance recipients to pay the estimated $1.6 million per year the break for seniors is likely to cost.

That ``$3 solution,'' as one legislator called it, received unanimous support Wednesday in the Workforce Services and Community and Economic Development Interim Committee. The vote capped months of debate pitting the interests of seniors and labor groups against those of Utah's powerful business lobby.

The compromise endorsed Wednesday is ``a reasonable, middle-of-the-road agreement,'' said committee co-chairman and state Rep. Steve Mascaro, R-West Jordan.

The proposal now awaits consideration when the Utah Legislature convenes in January. If passed as drafted, the bill would go into effect halfway through 2010.

Utah is one of seven states that reduces unemployment checks for out-of-work seniors when they are also drawing federal retirement benefits, in what's known as ``the Social Security offset.''

All seven of those states offset unemployment benefits by half the amount of a recipient's federal retirement check. Only two U.S. territories -- Puerto Rico and the Virgin Islands -- currently cut

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jobless benefits by the full amount of Social Security benefits, as Utah did until 2004.

Utah's offset was temporarily lowered to 50 percent when the state got an unexpected windfall of federal money, but it was set to return to the full amount next year.

Advocates for the elderly and the poor have urged doing away with it entirely, claiming that any offset unfairly discriminates against older workers, many of whom have been forced to return to the labor force after retirement age.

Lobbyists for major Utah employers, on the other hand, warned that eliminating the Social Security offset could raise unemployment insurance costs for businesses, as well as put additional pressure on the state's reserves for paying unemployment benefits.