As state lawmakers work on reforming Louisiana’s unemployment fund, the state agency overseeing the fund has borrowed $4 million in federal funds as of Wednesday to keep the system solvent.
Hundreds of millions of federal dollars are expected to be tapped after state officials moved to avert an automatic trigger of a business tax increase to maintain revenues. The coronavirus pandemic has drained the fund as large numbers of unemployed workers applied for benefits.
“The payment of unemployment benefits has never been in jeopardy,” Allison Sabine, spokeswoman for the Louisiana Workforce Commission (LWC), told the Louisiana Record in an email. “In fact, over 20 states are paying unemployment benefits through Title XII federal funding.”
The state will continue paying unemployment benefits, according to the commission. The fund, however, is expected to need hundreds of millions of dollars in the months ahead, according to the Revenue Estimating Conference (REC), a group of state leaders who examine the public funds available to spend on several key state services.
“At the September Revenue Estimating Conference, the 12-month estimate is that LWC will borrow approximately $232 million over the next year,” Sabine said. The LWC did not have an exact figure on how much will be needed.
Business leaders have been following the issue closely, especially since jobless benefit disputes have led to litigation in several states as the pandemic shut down parts of the economy. Michael Olivier, the CEO of the Louisiana Committee of 100 for Economic Development, noted that several bills to address the issue have been introduced in the current special session of the Louisiana Legislature.
“Due to circumstances, the loan from the federal government seems to be the only reasonable option to avoid an increase in business taxes at this time,” Olivier told the Record in an email.
Many of the bills to reform the unemployment fund are now pending in the House or Senate Labor and Industrial Relations committees. House Concurrent Resolution 20 would suspend the jobless fund tax trigger through the first two months of 2021, while House Bill 70 would suspend the tax indefinitely.
In addition, Senate Bill 54 would allow the REC more flexibility to meet and validate the fund’s balance at different times over the coming months.
Gov. John Bel Edwards, who is a member of the REC, said last month he favors moving $75 million from the state’s Main Street Recovery Grant Fund to the unemployment fund. Edwards also issued an amended emergency order that suspends the solvency tax, but state lawmakers have disputed whether that action was legal.
“One of the most important things the legislature can do in this upcoming session is to fix the Main Street program and to re-allocate the (Coronavirus Aid, Relief, and Economic Security) Act funding to where it is needed,” Edwards said in a letter to legislative leaders last month.