BATON ROUGE, La. – Governor John Bel Edwards announced his plan to put $550 million in the budget to help replenish the Unemployment Insurance Trust Fund. The trust fund, which was at more than $1 billion in the beginning of 2020, was depleted as a result of the pandemic and four major disasters that year.
"Over the course of the pandemic, we've paid over 700 thousand Louisianians more than $11 billion," said Louisiana Workforce Commission Secretary Ava Cates. "The need in Louisiana was unprecedented, and the drain on the trust fund reflects that."
The UI Trust Fund is where unemployment tax revenues are held and used to pay regular unemployment benefits and the state's share of extended benefits. State law says Louisiana’s UI Trust Fund must be maintained at $750 million or a tax increase on businesses who pay into the fund goes into effect automatically.
"When the pandemic happened, the trust fund evaporated before our eyes," said Gov. John Bel Edwards. "This investment will help ensure that unemployment benefits do not drop and also avoid a tax increase on businesses when they need it the least.”
The Governor's plan would use one-time federal funds to get the trust fund above the $750 million threshold, avoiding the tax increase on businesses.
A healthy UI Trust Fund helps stabilize the economy when jobless individuals have less to spend during hard times. UI plays a special role in boosting the economy during economic downturns allowing more benefits to be accessible and funding adequate for the UI program to be effective without draining the trust fund.
"We've got to continue to be a state that's not only good to our businesses but good at attracting businesses," said Cates. "Restoring our trust fund not only ensures that, it also ensures that safety net for the 1.9 million employees in Louisiana is there if they need it."
Ensuring the solvency of the UI Trust Fund helps to improve the business climate by keeping tax rates low. Using this one-time federal money would do that.
"This is not the time to kick the can down the road. We're creating a problem for the next generation when we could fix it right now," said Cates. "This benefits every Louisiana business and every Louisiana employee."
To keep the burden off Louisiana businesses, the UI Trust Fund must reach $750 million by August. If not, a tax hike on businesses and a decrease in benefits for those who need them is automatic.
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