Julie M. Whittaker
Specialist in Income Security
During some recessions, current taxes and reserve balances were insufficient to cover state expenditures for unemployment compensation (UC) benefits. UC benefits are an entitlement, and states are legally required to pay benefits even if the state account is insolvent. Some states may borrow funds from the Federal Unemployment Account (FUA) within the Unemployment Trust Fund (UTF) to meet UC benefit obligations. The 2009 stimulus package (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 §2004) temporarily waived interest payments and the accrual of interest on these loans to states from the FUA.
This report summarizes how insolvent states may borrow funds from the federal account within the UTF to meet their UC benefit obligations. Outstanding loans listed by state may be found at the Department of Labor’s website: http://www.workforcesecurity.doleta.gov/unemploy/ budget.asp#tfloans.
In 2012, 18 states and the Virgin Islands had a state tax credit reduction applied to the calculation of the federal unemployment tax (FUTA): Arizona (0.3), Arkansas (0.6), California (0.6), Connecticut (0.6), Delaware (0.3), Florida (0.6), Georgia (0.6), Indiana (0.9), Kentucky (0.6), Missouri (0.6), Nevada (0.6), New Jersey (0.6), New York (0.6), North Carolina (0.6), Ohio (0.6), Rhode Island (0.6), Vermont (0.3), Virgin Islands (1.5), and Wisconsin (0.6).
As of the date of this report, no relevant legislation in the 113th Congress has been introduced.
This report will be updated to reflect major changes in state UTF account solvency.
Date of Report: January 24, 2013
Number of Pages: 17
Order Number: RS22954
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