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33 United States States Short On Funding Jobless Workers Benefits
- By Huey Harden
- Published 04/19/2010
- Local Politics
- Unrated
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With unemployment at an all time high of 9% majority of United States federal states have virtually drained their jobless workers benefit funds dry, giving them no choice but to ask the US Federal government for more funds.
Currently, about 33 states and the US Virgin Islands used up their funds to borrow to the tune of a whopping total of $38.7 billion to provide a short term relief to millions of unemployed claimants.
As a result of this, federal states are cost cutting unnecessary services to save money. From entertainment like fireworks to catching stray chickens, these cash-strapped cities are getting rid of all kinds of extraneous services.
Debt-ridden California has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.
"The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. "While the recession has certainly made things worse, this funding crisis has been developing for years."
At the onset of the crisis, only 19 federal states met the recommended funding level, amounting to 1 year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.
Sources assume that states build up their jobless benefit warchest only during strong economic times so that they can draw from these fund during lean times like these.
However, in practice, to fill their meager budgets, local state governments gather funds for unemployment benefits by setting a fixed tax on employers on a small portion of their employee wages. While wages and the requirements for unemployment benefit levels have been skyrocketing, governments haven't been increasing the taxable base wages at the same pace.
Wrongly, they adopted a "pay as you go" method, taxing low during productive times and ironically raising taxes only when hard times come.
Only 13 states were able to fund jobless benefits without borrowing from the Federal government. Out of that about 10 of them followed the recommended path to finance their warchest.
Here's how much they've borrowed from the federal government.
State Borrowed
California $8.40 billion
Michigan $3.78 billion
New York $3.00 billion
Pennsylvania $2.81 billion
Ohio $2.23 billion
North Carolina $2.14 billion
Illinois $2.06 billion
Texas $2.03 billion
Indiana $1.81 billion
New Jersey $1.55 billion
Florida $1.50 billion
Wisconsin $1.34 billion
South Carolina $851 million
Kentucky $760 million
Missouri $687 million
Minnesota $638 million
Connecticut $422 million
Georgia $337 million
Nevada $331 million
Arkansas $318 million
Virginia $317 million
Massachusetts $279 million
Alabama $268 million
Rhode Island $204 million
Colorado $186 million
Idaho $181 million
Maryland $104 million
Kansas $65 million
New Hampshire $23 million
South Dakota $23 million
Vermont $23 million
Arizona $22 million
Virgin Islands $13 million
Delaware $1 million
Currently, about 33 states and the US Virgin Islands used up their funds to borrow to the tune of a whopping total of $38.7 billion to provide a short term relief to millions of unemployed claimants.
As a result of this, federal states are cost cutting unnecessary services to save money. From entertainment like fireworks to catching stray chickens, these cash-strapped cities are getting rid of all kinds of extraneous services.
Debt-ridden California has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.
"The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. "While the recession has certainly made things worse, this funding crisis has been developing for years."
At the onset of the crisis, only 19 federal states met the recommended funding level, amounting to 1 year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.
Sources assume that states build up their jobless benefit warchest only during strong economic times so that they can draw from these fund during lean times like these.
However, in practice, to fill their meager budgets, local state governments gather funds for unemployment benefits by setting a fixed tax on employers on a small portion of their employee wages. While wages and the requirements for unemployment benefit levels have been skyrocketing, governments haven't been increasing the taxable base wages at the same pace.
Wrongly, they adopted a "pay as you go" method, taxing low during productive times and ironically raising taxes only when hard times come.
Only 13 states were able to fund jobless benefits without borrowing from the Federal government. Out of that about 10 of them followed the recommended path to finance their warchest.
Here's how much they've borrowed from the federal government.
State Borrowed
California $8.40 billion
Michigan $3.78 billion
New York $3.00 billion
Pennsylvania $2.81 billion
Ohio $2.23 billion
North Carolina $2.14 billion
Illinois $2.06 billion
Texas $2.03 billion
Indiana $1.81 billion
New Jersey $1.55 billion
Florida $1.50 billion
Wisconsin $1.34 billion
South Carolina $851 million
Kentucky $760 million
Missouri $687 million
Minnesota $638 million
Connecticut $422 million
Georgia $337 million
Nevada $331 million
Arkansas $318 million
Virginia $317 million
Massachusetts $279 million
Alabama $268 million
Rhode Island $204 million
Colorado $186 million
Idaho $181 million
Maryland $104 million
Kansas $65 million
New Hampshire $23 million
South Dakota $23 million
Vermont $23 million
Arizona $22 million
Virgin Islands $13 million
Delaware $1 million
