Coronavirus: Ohio jobless fund to go broke by June without bailout, Husted says

[TexasTowelie]

COLUMBUS — Without a federal bailout, Ohio’s unemployment compensation fund will go broke sometime in June, forcing Ohio to borrow money, cut benefits or raise employer taxes to keep it going, Lt. Gov. Jon Husted said on Wednesday.

“One thing I want to reassure folks on is that does not mean you’re going to lose your benefits,” he said. “What the solution will be will in large part be up to the General Assembly. We need to work with them on this for a prescription on how we’re going to do this.

”Ohio’s unemployment compensation system has been in big trouble for more than a decade as the taxes paid by employers weren’t enough to keep up with benefits paid out. State leaders have failed to agree on a fix for years.

During the Great Recession, the fund went broke Jan. 12, 2009, forcing the state to borrow from the federal government to keep issuing unemployment checks. The state borrowed $3.4 billion and had to pay more than $200 million in interest on the loan.

Read more: https://www.daytondailynews.com/news/local/coronavirus-dewine-give-update-state-response-virus/bilyFYPTKm8mA3rBLrwYaJ/

[SheltieLover]

1. Ridiculous!

Why are employers not being taxed enough to cover claims?

[liberal N proud]

2. So this is similar to Social Security, whereas money is paid into a fund

So riddle me this, where did the surplus from the low unemployment years go?

[TexasTowelie]

3. Well, the number of unemployment claims did increase by an order of magnitude.

With ten times as many claims for unemployment, I don't think anybody would be stockpiling such a large reserve. The money to have such a large reserve is essentially being removed from the rest of the economy and business interests would have a legitimate argument for stating that employers are being taxed too heavily.

In Texas, the "rainy day" fund is about $14 billion if I recall correctly. While that sounds like a large amount, in reality it is only adequate to provide 70 days of operations under normal circumstances. Texas is fifth in the country for how long they can sustain their budget without receiving assistance from the federal government. Even knowing that the state only has a few months of reserves, people were already calling for the rainy day fund to be reduced to cover normal budgetary expenses.

There are other states such as Illinois, Kansas, and Pennsylvania that can literally exhaust their financial reserves in one day. Ohio only has financial reserves for about one month.

https://www.pewtrusts.org/en/research-and-analysis/articles/2020/03/18/states-financial-reserves-hit-record-highs