Solvency of state unemployment insurance a concern

Gov. John Bel Edwards said in his COVID-19 update on Tuesday that the state’s unemployment insurance trust fund is under a strain because of the ongoing unemployment resulting from the pandemic.

BATON ROUGE — During his COVID-19 update Tuesday afternoon, Gov. John Bel Edwards warned that the increased pressure on the state’s unemployment insurance fund could trigger additional costs for the state’s employers if other funding sources are not identified.

“We know there are people concerned about unemployment benefits,” Edwards said. “This is the last week that we have benefits at that level (with the additional $600 per week under the CARES Act) and hope Congress will pass new benefits soon. But the concern is the solvency of the state’s unemployment Insurance Trust Fund.”

According to Edwards, the increased drain on the state’s fund during the COVID-19 shutdown and subsequent economic slowdown has taxed the coffers, pushing the trust fund’s balance to a point where the funding parameters — in this case the amount of money employers have to pay in unemployment insurance taxes — may increase.

“Over time, if you pay out more in benefits than you take in, you run out of money in that trust fund,” Edwards said. “When it gets to be less than $100 million, it triggers increase in the tax on employers.”

Other solutions, like borrowing money from the federal government to help make up the shortfall, could bring its own set of problems for the state.

“You could borrow from the federal government, but you also have to set up a mechanism to pay it back,” Edwards said. “Obviously, this is not a good time to have an additional tax on employers.”

One option Edwards threw out is a lifeline for the state as part of the next round of assistance currently being debated in Congress.

“At the outset of the coronavirus outbreak, Louisiana had the 17th strongest unemployment trust in the country,” he said. “As we get closer to finding out what Phase Four of the government’s aid package looks like, it would be awfully helpful to Louisiana and its businesses to make sure that the trust fund is shored up and additional taxes are not necessary.”

Although he acknowledged that hospitalization numbers had been flat for the first time in weeks over the last six days, Edwards also noted that the state, on a per capita basis, is one of the hottest of the COVID-19 red spts on the map.

“We are number one per capita for COVID-19,” he said. “I knew we were on the track if we kept reporting those numbers. That per capita ranking should be an alarm bell for everyone as to how serious this is.”

The governor’s comments came on the same day The Advocate reported that reports from the White House COVID-19 Task Force recommended that the state should add additional restrictions, including limiting indoor dining establishments to 25 percent occupancy.

According to the latest report, the task force also recommended a mandate that people use masks in all current and evolving hot spots; that the state should close establishments where social distancing and mask use cannot occur, such as bars; that restaurants should move toward outdoor dining and limit indoor dining to less than 25 percent of normal capacity, and that citizens should limit social gatherings to fewer than 10 people.

State Fire Marshal Butch Browning said Alcohol Tobacco Control has suspended bar permits for public safety violations, pending a hearing, of four bars after flagrant violations of the state’s bar closure and social distancing requirements.

Dwayne Fatherree is the community editor for The Daily Iberian. He can be reached at dwayne.fatherree@daily-iberian.com.

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