The fund that pays Missouri’s unemployment benefits will be broke in a matter of weeks….is likely to recover…and then go more seriously broke later this year. But Missouri’s employers will have greater concerns than Missouri’s unemployed.
The state unemployment rate has averaged more than six percent since May and has drained the state unemployment trust fund. It will go temporarily insolvent in a couple of months… But state labor director Todd Smith says Missouri has been through this several times before, and it has never missed sending out benefit checks. That’s because the state can borrow money from the federal government, and will borrow it until unemployment taxes come in.
Smith says the trust fund will run out of money later in the year: "The biggest problem is we have just paid off the federal government from the last go-around in 2007 and we just didn’t have time for the fund to replenish itself and build up any kind of a surplus."
The last time the state had to borrow federal dollars to keep the checks flowing, it borrowed more than 400-million dollars. Employers already are paying a 30-percent surcharge on their unemployment withholding taxes to pump more money into the fund. Smith says that helps, but increasing taxes on employers at a time when they are cutting jobs seems counterintuitive. He says the legislature needs to take some action this year to ease the problem.\