Forty State Jobless Funds Will Be Broke In Two Years

Posted By on December 22, 2009

By Peter Whoriskey

The Washington Post
Mon., Dec . 21, 2009

The recession’s jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

“There’s immense pressure, and it’s got to be faced,” said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana’s unemployment program. “Our system was absolutely broke.”

Give-and-take
The Indiana legislation protected the aid checks, Niezgodski said, but it came after a give-and-take this spring in which Gov. Mitchell E. Daniels Jr. (R) said the state had been providing “Rolls-Royce benefits” and several thousand union workers countered by protesting proposed cuts at the state capitol. In January, the legislature is slated to consider a bill to delay the proposed tax increases intended to refill the fund.

In Nevada, Gov. Jim Gibbons (R) and legislators have feuded over the unemployment program, which is $85 million in debt to the federal government, with Gibbons accusing the legislature of “callous disregard” for not setting a tax rate.

And last week, a state task force in Kentucky recommended cutting benefits about 9 percent and imposing a week’s delay in their payment. The average benefit check there is about $309 a week. The task force also proposed raising taxes.

“There were some moments of high anxiety” during the negotiations between industry and labor groups, said Joseph U. Meyer, the state’s acting secretary of education and workforce development. “But in the end, the realistic options became fairly apparent.”

Two choices
State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered — either cut the benefit or raise the payroll tax.

Industry and business groups often lobby against raising the payroll tax on employers, while unions and other worker groups protest benefit cuts.

“We want to make sure Kentucky remains competitive and also maintain an environment of fairness,” Meyer said of the negotiations.

Nationally, the average tax is about 0.6 percent of payroll; the average weekly check is about $300.

Not prepared
The troubles the state programs face can be traced to a failure during the economic boom to properly prepare for a downturn, experts said.

Unemployment benefits are funded by the payroll tax on employers that is collected at a rate that is supposed to keep the funds solvent. Firms that fire lots of people are supposed to pay higher rates. The federal government pays for administrative costs, and in a recession, it pays for the extension of unemployment benefits beyond 26 weeks. But over the years, the drive to minimize state taxes on employers has reduced the funds to unsustainable levels.

“The benefits haven’t grown — that’s not the problem,” said Richard Hobbie, director of the National Association of State Workforce Agencies.

http://www.msnbc.msn.com/id/34519544/ns/business-washington_post/print/1/displaymode/1098/

About the author

Comments

32 Responses to “Forty State Jobless Funds Will Be Broke In Two Years”

  1. … [Trackback]

    […] Read More Info here on that Topic: thestatedtruth.com/?p=3402 […]

  2. … [Trackback]

    […] Find More on that Topic: thestatedtruth.com/?p=3402 […]

  3. … [Trackback]

    […] Read More on to that Topic: thestatedtruth.com/?p=3402 […]

  4. … [Trackback]

    […] Find More Information here to that Topic: thestatedtruth.com/?p=3402 […]

  5. … [Trackback]

    […] Find More Information here on that Topic: thestatedtruth.com/?p=3402 […]

  6. satta king says:

    … [Trackback]

    […] Find More here on that Topic: thestatedtruth.com/?p=3402 […]

  7. … [Trackback]

    […] Read More here to that Topic: thestatedtruth.com/?p=3402 […]

  8. … [Trackback]

    […] Find More on on that Topic: thestatedtruth.com/?p=3402 […]

  9. … [Trackback]

    […] Find More here to that Topic: thestatedtruth.com/?p=3402 […]

  10. … [Trackback]

    […] Info on that Topic: thestatedtruth.com/?p=3402 […]

  11. … [Trackback]

    […] Read More on on that Topic: thestatedtruth.com/?p=3402 […]

  12. … [Trackback]

    […] Info to that Topic: thestatedtruth.com/?p=3402 […]

  13. … [Trackback]

    […] There you can find 99677 additional Info to that Topic: thestatedtruth.com/?p=3402 […]

  14. … [Trackback]

    […] Here you can find 64618 additional Information on that Topic: thestatedtruth.com/?p=3402 […]

  15. lợn đẻ says:

    … [Trackback]

    […] Read More Info here on that Topic: thestatedtruth.com/?p=3402 […]

  16. … [Trackback]

    […] Find More on that Topic: thestatedtruth.com/?p=3402 […]

  17. … [Trackback]

    […] Read More here to that Topic: thestatedtruth.com/?p=3402 […]

  18. dumps pin says:

    … [Trackback]

    […] Find More Information here to that Topic: thestatedtruth.com/?p=3402 […]

  19. … [Trackback]

    […] There you will find 38318 additional Information to that Topic: thestatedtruth.com/?p=3402 […]

  20. … [Trackback]

    […] Find More here on that Topic: thestatedtruth.com/?p=3402 […]

  21. KIU says:

    … [Trackback]

    […] Find More on that Topic: thestatedtruth.com/?p=3402 […]

  22. … [Trackback]

    […] Find More on to that Topic: thestatedtruth.com/?p=3402 […]

  23. … [Trackback]

    […] Find More Information here on that Topic: thestatedtruth.com/?p=3402 […]

  24. dumps su says:

    … [Trackback]

    […] Here you will find 19126 additional Info on that Topic: thestatedtruth.com/?p=3402 […]

  25. … [Trackback]

    […] Find More Info here on that Topic: thestatedtruth.com/?p=3402 […]

  26. … [Trackback]

    […] Info on that Topic: thestatedtruth.com/?p=3402 […]

  27. … [Trackback]

    […] There you can find 13491 more Information to that Topic: thestatedtruth.com/?p=3402 […]

  28. … [Trackback]

    […] Find More here on that Topic: thestatedtruth.com/?p=3402 […]

  29. … [Trackback]

    […] There you can find 38811 additional Info on that Topic: thestatedtruth.com/?p=3402 […]

  30. … [Trackback]

    […] Find More here to that Topic: thestatedtruth.com/?p=3402 […]

  31. … [Trackback]

    […] Information to that Topic: thestatedtruth.com/?p=3402 […]

  32. … [Trackback]

    […] Read More on that Topic: thestatedtruth.com/?p=3402 […]

Copyright © 2021 The Stated Truth