Nevada could owe $1 billion for unemployment loans
With unemployment again hitting 13 percent in Nevada, the state could owe the federal government up to $1 billion for jobless benefits by the end of 2010.
The state exhausted its unemployment trust fund – which a year ago held $700 million – several months ago, Employment Security Administrator Cindy Jones said Thursday.
Since the recession began in July 2008, Jones said, the agency has paid out $2.4 billion to workers who lost jobs.
Nevada has had to borrow more than $201 million to ensure that unemployment checks don’t bounce.
With payments totaling $20 million a week, Jones said the state will probably owe the federal government between $800 million and $1 billion by the end of this year.
The state’s employment security tax imposed on businesses will only generate about $300 million in 2010, Jones said.
Currently at 1.33 percent, that tax will have to go up to repay the debt, she said.
“Eventually, the employers will have to pay for it,” she said.
For calendar 2010, Jones said there is no interest on the loaned money. But after that, the state will have to pay 4.6 percent interest.
In addition, the federal government only gives states a two-year window to begin paying back unemployment trust fund loans. After that, if the state doesn’t increase the tax on businesses to pay back the loans, the federal government will do so itself to collect the money.
Jones said Nevada is one of about 40 states borrowing money from the federal government because their employment security trust funds have been drained by the recession. By year’s end, the nationwide total owed could reach $90 billion.
“We’re hoping the federal interest-free period will be extended,” she said.
During the recession of the 1980s, federal officials extended the period for states to repay the loans.
Unemployment fell two months straight in October and November – the first monthly declines since February 2008. But the rate jumped back up to 13 percent in December, primarily because retailers didn’t hire nearly as many Christmas season temporary workers as they have in the past, and construction workers were laid off after the City Center project in Las Vegas was completed.
A 13 percent unemployment rate translates to 176,100 Nevadans looking for work.
With the extensions added on to unemployment insurance benefits by Congress and the Labor Department, those without jobs can now receive up to 99 weeks of benefit checks. In Nevada, the maximum check is $400 a week.