Analysis: La. Session Yields No Unemployment Fund Solution
BATON ROUGE, La. (AP) — Before they wrapped up their special session, Louisiana lawmakers gave a short-term infusion of cash to the state’s bankrupt unemployment trust fund, while sidestepping any decisions on how to return the fund to long-term stability and solvency in the coronavirus pandemic.
Instead, they decided on the “wing and a prayer” approach for a fund that has been drained by the steep increase in jobless workers.
Louisiana’s legislators are hoping — like other officials around the country — that Congress will find a way through its dysfunction after the election and send struggling states more aid to respond the virus outbreak’s financial wreckage.
And they created a task force to make recommendations, the traditional legislative method for punting on decision-making.
Sen. Troy Carter, chairman of the Senate labor committee, wasn’t exactly thrilled with the approach taken in the nearly four-week special session.
“We can only kick a can for so long until we run into a wall,” Carter, a New Orleans Democrat, told his committee earlier this month. “We would not run our households this way.”
But no one’s come up with a list of ideas for how to refill an unemployment trust fund that topped $1 billion in March before the coronavirus outbreak struck Louisiana. Gov. John Bel Edwards also appears to be crossing his fingers and looking to Washington for assistance. The Democratic governor’s administration hasn’t publicly recommended other proposals for replenishing the fund.
The pandemic upended the balance of taxes in and payments out of the fund. A trust fund that usually paid benefits to a few thousand people each month suddenly was inundated with claims as businesses shuttered or limited by coronavirus restrictions laid off hundreds of thousands of Louisiana workers.
Louisiana started borrowing money this month from the federal government to pay jobless benefits after draining its trust fund. Many other states are doing the same.
It wasn’t immediately clear how much in cash advances Louisiana has received — and will have to repay — from the federal government. The state labor department that administers the unemployment program, known as the Louisiana Workforce Commission, didn’t respond to requests for information from The Associated Press.
Lawmakers and Edwards didn’t want to use the method outlined in law for refilling the trust fund, which would have required tax hikes on businesses and a decline in benefits for jobless workers who receive some of the lowest unemployment payments in the nation.
They agreed to a package of measures by Senate President Page Cortez and Sen. Mike Reese, both Republicans, to suspend those legal provisions and keep the unemployment benefits and tax rates on businesses that pay into the fund at the status quo through 2021.
“We’re just trying to buy a little time,” Reese said.
Lawmakers and Edwards said businesses and out-of-work residents struggling in the coronavirus outbreak shouldn’t be further penalized. The move will keep unemployment benefits — a maximum of $247 per week — from falling to the lowest in the nation at $221 a week. Supporters said the move also will save businesses $60 million in taxes.
“The statute that we passed to say keep those rates static for next year, for 2021, gives businesses in Louisiana the sense that, ‘OK, there’s some normalcy. We’re not going to be taxed higher in our unemployment insurance,'” said Cortez, of Lafayette, a business owner.
Legislators also steered $85 million to the unemployment trust fund to help cover some benefits. Edwards supported the spending plan. But that money isn’t expected to last long.
During one hearing, Alexandria Democratic Sen. Jay Luneau asked the question no one has yet answered about returning the unemployment trust fund to solvency: “Where in the world are we going to get the money to pay for this?”
For now, all eyes remain on Congress.
“Are we going to get money (from Washington) after the election? I think everybody believes we will in some form or fashion,” Cortez said.
Meanwhile, a 13-member task force must hold its first meeting by Dec. 1 to start looking at ways to replenish the fund, which could include long-term borrowing by the state. The Legislature comes back in April for its regular session and can consider recommendations then if Washington doesn’t provide relief.
By AP reporter Melinda Deslatte