New Hampshire’s unemployment trust fund has been drained by about $30 million since the coronavirus crisis began — enough to spark a tax increase on businesses next quarter, if federal help does not arrive soon both in terms of cash and in terms of changing the law.
The state would have been paying out more than it has but won’t because the federal government will reimburse it for some of the money. But New Hampshire appears to be currently on the hook for most of it.
Through April 10, four three weeks after the coronavirus crisis began, the state paid out $31.7 million for some 114,000 unemployment claims.
Department of Employment Security Deputy Commissioner Richard Lavers said the federal government is only responsible for 40% of the amount already paid. That’s because 60% is traditional unemployment insurance, paid to people who were eligible for state benefits before both the state and the federal government expanded eligibility in response to the pandemic.
In other words, when a restaurant shut down — due to the pandemic or for any other reason — its were entitled to collect unemployment. Therefore, the state must pick up the tab. If, however, they were self-employed, they would be eligible under the new rules, so the federal government would eventually pay for it.
Those new rules, particularly involving self-employed individuals, are delaying the state payout, Lavers said. Another major holdup is those who worked in other states last year, since the federal system that keeps track of that has crashed due to the unprecedented volume nationwide, Lavers said.
State officials are lobbying the federal government to change the rules, or perhaps change the law, so that the federal government would cover more payments.
But in the meantime, the state unemployment trust fund dropped from $299.5 million on March 13 to $270.5 million on April 15.
While the drain could be alleviated when federal reimbursement arrives, it should be accelerated when claims go down more smoothly, and especially once the added weekly $600 payments contained in the CARES Act go out.
The payouts would essentially be more than double the size of claims, though that extra money would be fully reimbursed by the federal government as well — eventually Still, said Lavers, “at the rate we are paying benefits, it would deplete the fund.” He added that the state could borrow from the federal government interest-free, but that would not be a desirable outcome. — BOB SANDERS
