[ad_1]
Nevada is strapped for cash to pay unemployment benefits.
But don’t worry if you are among the hundreds of thousands of unemployed and receiving, or receiving, unemployment pay: you will always receive your check without any hiccups.
The Nevada Department of Employment, Training and Rehabilitation on Thursday said the UI trust fund was depleted this week.
In the week ending December 5, 783,384 new unemployment claims were filed in 2020, of which 761,732 have been filed since the week ending March 14.
Nevada, which joins 22 other states, is asking the federal government for advances to pay for unemployment claims.
“DETR will continue to borrow funds if necessary under Title XII of the Social Security Act, as was done during the last recession, to ensure that eligible applicants receive their benefits without interruption,” Rosa Mendez, a spokeswoman for the agency, said in a statement. . “Borrowing federal government funds in this manner is typical in times of economic recession.”
Experts say the long-term impact will be felt by employers, who will likely face higher payroll taxes, and even new filers, who may see stricter eligibility requirements in the years. to come up.
The trust fund is financed by payroll taxes from employers.
“I think there is a very good chance of an UI tax hike to pay off these loans,” Thoran Towler, CEO of the Nevada Employers Association, told the Review-Journal.
“There have been significant unemployment insurance tax cuts in recent years because the fund had accumulated so much ‘surplus’ over a long period of economic growth. There has been no increase this year due to the pandemic, but an increase next year is likely.
Matt Weidinger, of the American Enterprise Institute think tank, has previously indicated that future UI filers could be affected even more directly.
“You can either raise taxes to support the level of benefits you want to provide, or you can reduce (a filer’s) benefits in one way or another – you can reduce the number of weeks, you can reduce the number of weeks. dollar amount – there are all kinds of ways for the benefits side, you can adjust but there is a balance, ”he said.
Borrow again
On Thursday, the state borrowed $ 14.57 million from the federal government to pay the claims. States can borrow money when their unemployment insurance trust funds have run out under Title XII of the Social Security Act.
This is not the first time Nevada has done this.
It took the state seven years to repay the federal government $ 773 million to cover unemployment benefits during the Great Recession, when the state saw 175,000 jobs dry up and the unemployment rate topped 14% .
This year, Nevada’s unemployment rate hit the nation’s highest level of 30.1% in April, according to the US Department of Labor. In November, Nevada’s unemployment rate was 10.1%.
Mendez said the Nevada trust fund had lasted nine months of “extraordinary activity” due to the agency’s actions to build reserves ahead of the COVID-19 pandemic.
In a July 2020 report, the agency said the UI trust fund was “well positioned” at the start of the response to the COVID-19 pandemic with “its healthiest balance on record by a just over two billion dollars in February 2020 ”.
Loans Nevada has taken out to pay unemployment claims will have no interest accrued until the end of the year under the Families First Coronavirus Response Act.
The agency said it was working with the state’s Job Security Council to set employer contribution rates that balance current and future needs and rebuild the trust fund where appropriate.
Towler, of the Nevada Employers’ Association, said if there was a tax increase, the actual impact on employers would depend on their current rate.
“Employers currently pay within a set range that depends on their history of claims. The actual increase felt would vary for each employer, ”Thoran said. “That being said, employers are quite afraid of any tax increases in Nevada’s current economic situation.”
Contact Jonathan Ng at [email protected]. To follow @ByJonathanNg on Twitter.
[ad_2]
Source link