Lawmakers hope to avoid unemployment surcharge for businesses

Louisiana legislators are hoping to find a way to avoid the higher business taxes and fees that could kick in next year to replenish the state unemployment insurance trust fund.
Employers pay taxes to support the fund that pays for unemployment benefits. When it falls below $750 million, the amount of a company’s wages that are taxable increases, benefits decrease, and a program that helps businesses train workers goes away. When it falls below $100 million, Louisiana law mandates that the Louisiana Workforce Commission impose a surtax on businesses of up to 30% on taxable payroll.
The fund, which contained more than $1 billion before the COVID-19 pandemic began, now stands at about $99 million, LWC Secretary Ava Dejoie said Friday. The commission has started the process to borrow money from the federal government to pay legally required benefits and expects to have access to up to $200 million around Oct. 1.
Continued unemployment claims in Louisiana, which count residents who have filed at least two weeks in a row, stood at 250,244 last week. During the same week in 2019, state residents made 14,792 continued claims.
The cost and benefit changes wouldn’t kick in until next year, Dejoie said, speaking to the Legislature’s joint budget committee. House Appropriations Committee Chairman Jerome Zeringue said he has asked staff to look at options to offset the new costs for businesses, possibly with a bond issue.
Dejoie said her staff has reached out to other states to see how they are dealing with the issue, which is common nationwide.
Some are using federal CARES Act dollars to replenish their funds, though Louisiana already has allocated the $1.8 billion it received for government and small-business expenses related to COVID-19 and to make one-time “hazard” payments to frontline workers, and there may not be any money left over.
State officials were hoping the federal government would help states shore up their funds through an additional COVID-19 relief package that Congress as of now has not delivered.
The federal loan to pay benefits will be interest-free through the end of the year and will cost less than 2 percent thereafter, Dejoie said. The money does not go into the fund. State officials have estimated a need of about $200 million per month, which the state would draw down as needed, much like a line of credit. The state would be required to begin paying back the money next September.
Also at Friday’s joint budget meeting, Commissioner of Administration Jay Dardenne said he does not expect the state to run a mid-fiscal-year budget deficit. There have been concerns that the current recession would lead to falling revenue and require mid-year spending cuts.
Secretary of State Kyle Ardoin said he is consulting with Attorney General Jeff Landry’s office but has not yet decided whether he will appeal this week’s district court ruling ordering his office to expand absentee voting options for voters with COVID-19-related health concerns.
The budget committee on Friday gave Ardoin’s office, which runs the state’s elections, authority to spend $4.9 million in federal CARES Act dollars to pay for COVID-19-related election expenses.