With the Louisiana legislature set to open its annual session on Monday, business groups are urging lawmakers to hit the reset button on the state’s Unemployment Insurance Fund, which has seen its fortunes depleted during the coronavirus pandemic.
In his budget proposal released earlier this year, Gov. John Bel Edwards called for the use of $550 million from the federal American Rescue Plan to replenish the fund so that it has a balance of $750 million by September. That’s the point at which it can legally function without triggering automatic business taxes or benefits cuts.
The fund had about $1.3 billion in 2020 before COVID-19 cases ramped up, according to Jim Patterson, the vice president of government relations for the Louisiana Association of Business and Industry (LABI). The association would like the legislature to get the fund up to $750 million to avoid further financial burdens on struggling businesses in the state, Patterson said.
“Businesses are not responsible for this pandemic,” he told the Louisiana Record. “They didn’t bring this about.”
Thousands of Louisianans had to file unemployment claims once shelter-at-home orders were in place, and the legislature moved to suspend the automatic tax triggers and benefit cuts during the pandemic, Patterson said.
“We don’t want our trust fund to become insolvent and have to go to the federal government to start borrowing money (again) because that comes at a cost ultimately,” he said.
The state paid off what it owed to the federal government to keep the fund solvent during the pandemic, according to Patterson. The legislature also added about $200 million to the trust fund last year.
“We are now at a point where we are able to manage the outgo of benefits,” he said.
The National Federation of Independent Business chapter in Louisiana is also urging the state to backfill the fund with federal coronavirus recovery money to avoid future tax hikes on small businesses.
“We will continue to fight for small biz during this year’s legislative session to keep the UI program manageable for employers and for the workers who need it,” Louisiana NFIB state director Dawn McVea said in a prepared statement.
A clearer picture of the UI fund’s balance will become more clear once the first-quarter funds paid into it by businesses are tallied up. Issues related to the handling of the fund have been the subject of civil litigation over the past year.