Arizona Repays Loans That Funded Unemployment Insurance
PHOENIX — Arizona has repaid hundreds of millions of dollars in loans it took out to keep its unemployment insurance fund solvent during the Great Recession and is running a surplus for the first time in years, the state Department of Economic Security announced Wednesday.
The state made a final payment of $44 million to the federal government for loans it took out to fund checks to unemployed workers last week and the fund now has a balance of $160 million.
The turnaround is a sign that the economy is rebounding from the Great Recession, which saw unemployment rates soar above 11 percent in late 2009 and payouts drain $1 billion in reserves. Arizona joined many other states borrowing from the federal government in 2010 and at one point owed $420 million.
But with the state's unemployment rate currently at 6.2 percent, the drain on the fund is over for now.
Employers are the biggest beneficiary of the turnaround, according to Mark Darmer, deputy director of programs at DES. When the trust fund was insolvent and had borrowed the most money from the federal government, they were hit with a special assessment of $21 a year per employment to help repay the cash, plus an increase in the federal unemployment taxes.
Both those assessments are gone, and employers are paying an average of $160 a year per employee now. That rate is expected to come down as the trust fund balance rebuilds, Darmer said.
"This is very good for the state, it's part of what help us recruit employers to the state by having a solvent trust fund," Darmer said. "We have unemployment that is coming down. The number of people on unemployment insurance is close to pre-recession levels, which is great."
The state saw nearly 200,000 residents drawing unemployment benefits during the height of the recession, and only about 23,000 are drawing benefits this week. Arizona has one of the lowest weekly benefit amounts in the nation, $240 a week.
According to the National Conference of State Legislatures, 22 states and the U.S. Virgin islands owed a total of $28.8 billion to the government for unemployment insurance loans in early 2013, with California leading the way with a $10.7 billion debt. Now, six states and the U.S. Virgin Islands owe $7.1 billion, with California owing $5.2 billion of that amount, federal statistics show.