Thursday, June 20, 2024

Louisiana’s unemployment trust fund expected to fully recover from COVID-19

by BIZ Magazine

By Julie O’Donoghue, Louisiana Illuminator

After practically running dry in 2020, Louisiana’s unemployment trust fund is expected to climb back to its pre-COVID-19 pandemic level by August next year, state officials said Thursday.

“We’ve actually made it all the way back,” Robert Wooley, head of the Louisiana Workforce Commission, said during a meeting of the state’s revenue estimating panel Thursday.  “We’ve borrowed several hundred million dollars and paid it back.”

The trust fund provides government unemployment benefits to Louisiana residents who lose their jobs. In 2019, it had a healthy $1.1 billion balance, but a massive surge of claims from the COVID-19 pandemic caused it to start running out of money in the fall of 2020. The state ended up borrowing hundreds of millions of dollars from the federal government to keep it solvent. 

Gov. John Bel Edwards and lawmakers then voted to put almost $1 billion back into the unemployment trust fund over 2021 and 2022 to dig it out of that financial hole. Some of that money went directly to paying off the fund’s loans from the federal government.

The governor and legislators also opted to suspend extra taxes and fees on employers that are supposed to be triggered when the trust fund drops below a safe threshold. Edwards said it wasn’t prudent to raise taxes on businesses when they were trying to recover from COVID-19.

The strategy from the governor and lawmakers for restoring the fund appears to have worked. As of Aug. 31, the fund’s balance was $930.6 million. By next year at this time, it is projected to be over $1.02 billion, officials said.

The state’s payout of unemployment benefits has also gone from $1 billion in 2020 and $600 million in 2021 to a projected level of $124.4 million this year.

Several other states also had to borrow money from the federal government during the COVID-19 crisis, and at least five of them are still paying off those loans, Wooley said.

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