Unemployment trust fund runs dry

Unemployment trust fund runs dry

The state unemployment insurance trust fund that is used to pay benefits to Louisianans who have lost their jobs ran out of money this week. That means the state will have to borrow money from the federal government to pay claims. The dwindling trust fund is supposed to trigger new taxes on businesses and lower weekly benefits for workers, but legislators are trying to buy themselves some time. Nola.com | The Advocate’s Sam Karlin sorts it all out

Legislators started advancing several resolutions, sponsored by Senate President Page Cortez, to suspend tax hikes and benefit cuts that would otherwise automatically go into effect because the unemployment trust fund has been depleted so much. That means workers and businesses roiled by the recession won’t suffer more by seeing smaller checks or higher taxes, at least for now. It also means the state will need to find another way to pay back the debt it will incur from the feds. “We can only kick the can for so long before coming up against a wall,” said Senate Labor and Industrial Relations Committee Chairman Troy Carter, D-New Orleans.

Louisiana was originally planning to borrow $200 million per month to meet its obligations. But that figure has dwindled and the state now expects to need a total of $236 million. The reason? People who became unemployed in the early days of the Covid-19 pandemic have now exhausted their 26 weeks of state benefits, even if they remain without work. Many will receive federal unemployment benefits, which expire at the end of 2020 if Congress fails to renew them. 

 

Trump pulls the plug on stimulus talks
President Donald Trump called off negotiations on an economic rescue package on Tuesday, just hours after the chairman of the Federal Reserve said additional aid was badly needed. Trump declared on Twitter that the economy is “doing very well,” which is not true. The New York Times has more

Markets fell as the reality sank in that the economic recovery, which is slowing, would not get another jolt anytime soon. The S&P 500, which had begun to climb before Mr. Trump’s announcement, slid more than 1 percent soon afterward, and ended the day 1.4 percent lower. … His tweets came less than an hour before his Treasury secretary, Steven Mnuchin, and Speaker Nancy Pelosi were to resume talks on the phone aimed at hammering out a compromise. Instead, when they did speak, Mr. Mnuchin confirmed that Mr. Trump had withdrawn from the negotiations, and Ms. Pelosi, according to a spokesman, “expressed her disappointment.”

The Washington Post suggests Senate Majority Leader Mitch McConnell may be to blame: 

During a call Tuesday with the president, Senate Majority Leader Mitch McConnell (R-Ky.) suggested to Trump that Pelosi was stringing him along and no deal she cut with Mnuchin would command broad GOP support to pass in the Senate, according to two people with knowledge of the call who spoke on the condition of anonymity to discuss it.

Hours after calling off talks, Trump contradicted himself with a new series of Tweets that demanded, among other things, a new round of stimulus checks and targeted aid for the airline industry.


Louisiana officials turning their back on election aid
A nonprofit founded by Facebook chief Mark Zuckerberg offered nearly $8 million to help Louisiana elections officials buy protective gear, pay poll workers and shoulder pandemic-related expenses ahead of the Nov. 3 elections. Secretary of State Kyle Ardoin encouraged local registrars of voters to apply for the grants. Then Attorney General Jeff Landry got involved, filing a suit that seeks to have the arrangement declared illegal. Ardoin quickly backed off, and all the funding applications have been withdrawn. Nola.com | The Advocate’s Sam Karlin with the scoop: 

The dustup makes Louisiana one of several states – many of them hotly-contested swing states in the presidential election – where a partisan debate has exploded over whether it is appropriate for private money to help fund elections. And it comes as the state prepares to hold a major election in a pandemic, when voters are casting mail-in ballots at unheard-of rates and local election officials are facing challenges paying for precautionary measures.

 

Without federal relief, New Orleans cuts pay to city workers
Federal relief authorized in the CARES Act helped state and local governments stay afloat during the early months of the pandemic. But now, with no meaningful prospect of additional aid on the horizon and revenues down for the state and local governments due to reduced sales tax collections, cities are starting to feel the pinch. As The Lens’s Michael Isaac Stein reports, the City of New Orleans, which faces a $41 million shortfall, plans to furlough about 4,000 municipal workers for one day each pay period. Without more money from the federal government, however, Mayor Latoya Cantrell says that these cuts are likely just the beginning.

“Unfortunately, I anticipate that I may need to make additional requests of the Commission in the coming months,” Cantrell said in a letter to the Civil Service Commission. “As we approach the 2021 budget cycle, the City is facing revenue shortfalls as severe as we experienced in 2020, but without the expectation of the one-time funds or federal funding for 2021. We will only be able to reduce personnel expenditures enough to fill this funding gap through some combination of furloughs, pay reductions, and/or layoffs. When we introduce the 2021 budget at the end of this month, that budget will necessarily include personnel spending cuts.”

 

Number of the Day
$10.2 trillion – Total wealth held by the world’s 2,189 billionaires as of July 2020 – a new record. The previous record was $8.9 trillion, in 2017. (Source: UBS Global Wealth Management, via The New York Times)