Nevada burns through Trust Fund, now borrowing to pay jobless claims
After burning through more than $1.3 billion in the state’s Unemployment Insurance Trust Fund, Nevada is now borrowing from the federal government to make sure the state can pay jobless benefit claims.
But Nevada isn’t alone. There are 22 states borrowing from the federal government to pay unemployment benefits to jobless workers.
Under the federal law, no interest accrues on the borrowed money until after the New Year. But after that, the interest rate the federal government charge is significantly higher than the going rate for private loans, bonds and other sources of funding.
As of Wednesday, the state had borrowed $14.57 million from the federal government to cover benefits owed.
Nevada had to do the same thing to get out of the recession but paid it off through a bond process that significantly reduced the interest Nevada had to pay to the federal government.