The rising unemployment rate continues to put enormous strain on state budgets across the United States as layoffs continue to wreak havoc on the economy. Governors across the country already struggling with budget deficits, due to lost revenue from a weakened economy and the housing crisis, are trying to contend with the additional expense of ever rising unemployment filings.
There have already been 7 states that have emptied their insurance trust funds, and with 11 more on the brink of depleting their reserves by the years end, many will have to seek loans from the Federal Government. It is estimated that 2.3 billion dollars has already been borrowed from emergency funds, for which these funds must be repaid.
The National Unemployment rate is expected to increase to 7.5% after the figures come in for January, as nearly 4.8 million workers collected unemployment or extended unemployment checks last week, the highest numbers in the past 40 years.
South Carolina has the highest unemployment rate in the country, which has reached nearly 20%, and has already borrowed 110 million after their trust went bankrupt last fall. With 77 thousand on the unemployment rolls and already having borrowed 110 million from the Federal Government, the Governor has threatened firings if the agency officials responsible do not produce data and legitimacy of each filing, as well as more details about employers.
Governors from around the country are desperately trying to manage their debt, making cuts in every area deemed non-essential to lessen their debt while slashing the budget to cover deficits caused by revenue losses from the economy.
The stimulus package is expected to bring some relief to debt ridden states by; bolstering unemployment benefits, focusing on extending benefits and COBRA health benefits, and extending the interest grace period for states that are forced to barrow from the Federal Government.
A proposal to raise payroll taxes is unwelcome in the legislature, in an already shaky economy, a tax increase is seen as another nail in the economy’s coffin. Other options being considered by states already in debt is pulling dollars from other state funds or limiting eligibility.
