W.Va. Senate passes jobless fund loan option
CHARLESTON, W.Va. (AP) — Amid fears West Virginia could run out of money next month for jobless benefits, the state Senate unanimously approved a measure Wednesday that would allow the program to borrow from the state’s emergency reserves.
The bill passed to the House would provide the Unemployment Compensation Trust Fund an alternative to raising taxes on employers, or having to take out federal loans as 34 other states have done during the economic downturn.
Proposed by acting Gov. Earl Ray Tomblin, the measure would allow West Virginia’s program to borrow from the state’s rainy-day fund whenever its balance dips below $20 million. The program would have 180 days to repay the loan, which could be up to that amount.
“We’ll only borrow what we have to have,” said Russell Fry, acting executive director of WorkForce West Virginia.
Fry’s agency oversees the program, which provided benefits to nearly 24,000 job seekers at the end of last month. He said its fund began this week with a $65.2 million balance. Agency officials forecast that it could run dry briefly in March before scheduled revenues arrive to restore it to the black.
“This is a reason why the Legislature has moved on this very quickly, and we’re very happy that they’ve done such,” Fry said.
When the recession began in December 2007, West Virginia’s seasonally adjusted unemployment rate stood at just 4 percent and its benefits fund contained $244.7 million. Though the state continues to see signs of recovery, it ended 2010 with a 9.6 percent unemployment rate. Only a dozen states had higher rates.
Thirty states, including all of West Virginia’s neighbors except Maryland, still owe $42.6 billion from federal loans to their unemployment funds as of Monday. Maryland borrowed federal money for its program last year, but has since paid it back.
West Virginia hopes to avoid a repeat of the 1980s, when its fund became insolvent. Forced to borrow federal funds, the state issued bonds that it then paid off by levying a special surcharge on employers and workers.
The fund gets its revenues from a tax, of 2.7 percent for most businesses, that employers pay on the first $12,000 of each worker’s wages. Lawmakers increased that base rate from $8,000 in 2009 in an effort to keep the fund solvent, and are loathe to revisit that option. The base wage rate will drop to $9,000 once the trust fund balance stays above $220 million. It will then remain linked to changes in wage levels.
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