Unemployment and Unemployment Insurance

Legislation that proponents say will structurally balance Indiana’s unemployment trust fund within two years has been signed into law.

When President Obama's 2012 budget is unveiled next week, it will include a surprise gift to states indebted to the federal government for unemployment insurance trust fund loans. Administration officials are reporting that the president's proposal will include a plan to give states a two year respite from automatic tax increases and interest payments on unemployment insurance loans. 

As state leaders come together to hammer out their 2012 fiscal year budgets, many will find a new bill to pay—and it isn’t small. Thirty-one states have borrowed more than $42.5 billion from the federal government to continue paying unemployment benefits, and interest on those loans comes due this fall.

This report summarizes the meeting of the Fiscal Affairs Roundtable at the 2010 CSG National Conference in Providence, Rhode Island.  Issues discussed include a fiscal outlook for 2011, unemployment insurance, public pensions, and federal financial reform.

The economy is starting to pick up again, but state policymakers shouldn’t get too excited.

“We can all kind of feel the economy is starting to pick back up again,” said Peter Marino, fiscal adviser to the Rhode Island Senate. “I would describe it as a vulnerable recovery.”

NOW, THEREFORE BE IT RESOLVED, that The Council of State Governments urges that the United States Congress extend the moratorium in place under the American Recovery and Reinvestment Act of 2009 on the payment and accrual of interest on state loans from the Federal Unemployment Account.

Unemployment rates remain high and people are unemployed for longer, exhausting state unemployment trust funds quickly. More states are borrowing from the federal government to cover costs, which could have an impact on future fiscal stability.

Unemployment rates remain high and people are unemployed for longer, exhausting state unemployment trust funds quickly. More states are borrowing from the federal government to cover costs, which could have an impact on future fiscal stability.

As the national unemployment rate hovers around 9.5% and with state unemployment rates as high as 14.2%, states are hemorrhaging money from their unemployment trust fund accounts - the funds states use to pay unemployment benefits. Every month, more states are forced to borrow from the federal government to keep those trust funds afloat and last week, the tab for states hit just over $39 billion.  

June unemployment figures were released today and states are looking a little better than they were in May.  Thirty-nine states experienced a small decrease in unemployment over last month, while five states had increases and six states reported no change in their rates.  New Hampshire had the biggest month-over-month drop, falling .50% from May to 5.9%, while Nevada and Louisiana had the biggest increases, each jumping .20% in a month. 

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