State likely to seek loan to keep jobless fund solvent

Trust fund — which had more than $4.7 billion at the start of March — is currently down to $2.8 billion.

  • By RACHEL LA CORTE Associated Press
  • Monday, June 29, 2020 1:30am
  • Northwest

By Rachel La Corte / Associated Press

OLYMPIA — Washington state could make a request for a federal loan as soon as August or September to secure funds by the end of the year in order to keep its unemployment trust fund solvent as it continues to pay out benefits to those affected by the coronavirus shutdowns, Employment Security Department Commissioner Suzi LeVine said Monday.

The state’s unemployment trust fund — which had more than $4.7 billion at the start of March — is currently down to $2.8 billion, according the latest numbers from the agency.

LeVine said that the state’s unemployment trust fund has been strong over the years, and she noted that Washington was one of the few states that did not require a federal loan to bolster the system during the Great Recession.

“When you look, however, at the fact that the demand for unemployment benefits are seven to 10 times what they were during the recession, it really draws on this pool of funds dramatically,” she said during a phone interview. She said that while she didn’t want to say that the need for the loan was inevitable, it was “highly likely given the volume and demand and potential length of time for utilization of this system.”

Nearly 1.2 million people in Washington state have filed claims for unemployment since early March, when the pandemic job losses began. To date, the state has paid more than $6.5 billion in benefits to more than 875,000 people who filed initial claims.

Two thirds of that amount is federal money that is providing the unemployed with an additional $600 a week on top of the state’s weekly maximum benefit of up to $790 per week, the second highest in the nation.

In May, the Employment Security Department revealed that it had paid out up to $650 million through tens of thousands of fraudulent claims, of which, the state has recovered $357 million. A West African fraud ring using identities stolen in prior data breaches, such as the massive 2017 Equifax breach, is believed to be behind the fraud, which has targeted several other states during the pandemic. Earlier this month, members of the National Guard were brought to help with ID verification on claims.

About a dozen states have already been approved by the federal government to receive loans, and several have already received funds, including California, New York and Texas.

While the projected shortfalls won’t prevent unemployed workers from getting government aid, the federal loans could lead to higher taxes for businesses in future years to repay the debt.

State unemployment benefits are funded by special taxes on employers and paid through state trust funds. Each state sets its own tax rate and benefit payment amounts. When trust funds run low, states can get federal loans that must be repaid with interest.

The federal government’s coronavirus response package includes a provision allowing states to borrow money at zero interest for the rest of the year to cover unemployment benefit costs. Remaining balances and any future loans would be subject to interest payments, although states are hoping that federal officials extend the interest-free provisions — or forgive the loans entirely.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Northwest

Guns for sale at Caso’s Gun-A-Rama in Jersey City, New Jersey, which has been open since 1967. (Photo by Aristide Economopoulos/New Jersey Monitor)
After suing, WA gets carveout from Trump administration plan to return gun conversion devices

The Trump administration has agreed to not distribute devices that turn semi-automatic… Continue reading

The Wild Horse Wind and Solar Facility about 16 miles east of Ellensburg in central Washington is part of Puget Sound Energy’s clean energy portfolio. (Courtesy of Puget Sound Energy)
Megabill’s elimination of tax credits for clean energy projects could cost WA $8.7 billion

Washington households could see electricity costs increase $115 per year by 2029; 21,800 workers could lose their jobs by 2030, analysts say.

Washington State Ferries said it would deploy its new electric ferries first on the Mukilteo-Clinton run. Additional orders are expected to follow to replace more than a dozen other aging vessels in the fleet. (Photo by Tom Banse)
Washington state to buy new hybrid electric ferries from Florida shipyard

Gov. Bob Ferguson made the final call to turn down a higher bid from a local boat builder.

The Washington state Capitol. (Photo by Jacquelyn Jimenez Romero/Washington State Standard)
These Washington laws take effect July 1

Fee hikes for hunting and fishing licenses, workplace protections for immigrants and… Continue reading

Washington will have the nation’s third-highest state gas tax behind California and Pennsylvania.(Photo by Bill Lucia/Washington State Standard)
Gas tax will rise in Washington on July 1

Washington’s century-old fuel tax is going up again. On Tuesday, the gasoline… Continue reading

The BEAD program was created under the federal infrastructure law that former President Joe Biden signed in 2021. It was fashioned as a way to expand high-speed internet service into rural areas and other parts of the country where it was unavailable or lacking. (Stock photo)
Feds throw Washington’s $1.2B broadband program into disarray

States spent more than two years preparing to distribute the infrastructure funding, now the Trump administration is making last-minute changes to the rules.

Firefighters undertake a prescribed burn at the Upper Applegate Watershed near Medford, Oregon on Thursday, April 27, 2023. Such burns can help reduce the risk of large wildfires. (Kyle Sullivan, Bureau of Land Management/Flickr)
Trump looks to ‘consolidate’ wildland fire agencies

An executive order signed earlier this month by President Donald Trump would… Continue reading

Photo courtesy of Washington governor’s office
Washington Gov. Bob Ferguson, center, met with several statewide elected officials on Monday to discuss the how federal funding cuts could impact the state.
Tax collections tumble again in latest Washington budget forecast

The decline in receipts will force the state to draw down savings, but Gov. Bob Ferguson said he isn’t ready to summon the Legislature into a special session.

An EV charger in Granite Falls outside of Granite Falls City Hall on Thursday, Aug. 22, 2024 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Seattle judge orders Trump administration to unfreeze EV charger funding

The preliminary court ruling would unlock the money for more than a dozen states, including $71 million for Washington.

Nearly three-quarters of acute care hospital inspections were late, as of December, according to the Joint Legislative Audit and Review Committee. One facility hadn’t gotten a state inspection since early 2018. (Stock photo)
Washington faces major lag in state inspections of hospitals

Washington state inspectors are way behind in their examinations of hospitals and… Continue reading

A classroom inside College Place Middle School in Lynnwood in 2023. New discipline guidelines for public school students will go into effect across Washington state next month. (Annie Barker / The Herald)
Washington updates student discipline rules for public schools

New discipline guidelines for public school students will go into effect across… Continue reading

The Northwest ICE Processing Center in Tacoma, which is one of the largest immigrant detention facilities in the western U.S. (Grace Deng/Washington State Standard)
WA looks to strengthen safety net for children whose parents are deported

Detained immigrant parents worried who will pick their children up from school.… Continue reading

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.