32 states borrow billions from feds to cover unemployment benefits

Unemployment compensation extension, where will the money come from?

Hawaii Joins 31 States in Borrowing Millions from the Federal Government to Cover Unemployment Benefits

BY MALIA ZIMMERMAN - Hawaii has applied to be the 32^nd state to borrow from the U.S. Department of Labor’s Employment and Training Administration to pay state unemployment benefits.

Hawaii will temporarily take up to $30 million this December to cover payments to the state’s 17,000 unemployed workers who lost their jobs within the last 26 weeks.

That is the beginning of what will likely be an 18-month borrowing streak, says state Department of Labor and Industrial Relations Interim Director Pearl Imada Iboshi, who notes that the state could need as much as $30 million a month from the federal government to cover Hawaii’s fund.

States have borrowed an estimated $40 billion from the federal government for unemployment benefits. Meanwhile, federal unemployment benefits coming from stimulus funds over the last two years ran out November 30, 2010, and won’t be renewed. That impacts the state’s 11,000 people unemployed between 27 and 99 weeks.

However,[for Hawaii’s businesses] there are tax hikes coming anyway. Several business advocacy organizations and business owners were concerned with the rates that will force employers to pay an average per employee of $630 in 2010, $970 in 2011, $1,560 in 2012 and $1,600 in 2013. This compares to $90 per employee in 2007.