States beg and borrow to help pay jobless benefits

[OhioChick]

12.09.08, 08:14 AM EST

Five states, including Ohio, are in danger of running out of funds they use to pay unemployment benefits, meaning they may have no choice but to increase taxes on employers, cut benefits for laid-off workers or borrow the cash.

This comes at a time when job cuts are accelerating and states are facing huge deficits going into next year.

States with unemployment funds that are running low are mostly larger ones that are tied closely with manufacturing.

Michigan, Indiana, Ohio, New York and South Carolina all have reserves of less than three months to cover benefits.

States aren't allowed to stop paying unemployment insurance benefits to out-of-work employees so they must come up with money.

Indiana is planning to borrow $330 million from the federal government to cover unemployment claims, something it hasn't done in 25 years. State lawmakers also may be forced to tax businesses to rebuild the fund.

Some businesses in Michigan will pay an extra $67.50 per employee next year to make up a $473 million deficit in the state's unemployment benefits trust fund. The state has borrowed money to keep the fund afloat the past two fiscal years.

More: http://www.forbes.com/feeds/ap/2008/12/09/ap5797571.html

[bluestateguy]

1. States should be allowed to run deficits

I've never been one of these people who worship at altar of balanced budgets.

[Azlady]

2. I'm surprised there are not more States on that list...

Hate to say that, but look at the number of lost jobs in the past 2 months alone! Geez.