State Funding For Unemployment Benefits Likely To Run Out Leaving Illinois To Borrow From Federal Government

NewsColony
State Funding For Unemployment Benefits Likely To Run Out Leaving Illinois To Borrow From Federal Government

CHICAGO (CBS) — One in six working Americans is now out of a job and may be struggling to pay their rent or mortgage or feed their families. In just the last seven weeks more than 750,000 people in Illinois filed unemployment claims. That’s more than what was filed all last year.

During those seven weeks, Illinois paid out more than $700 million in benefits.

The CBS 2 team is Working for Chicago, getting information about new resources for businesses trying to avoid layoffs and reporting that uncovers whether the state has enough money to keep paying those unemployment benefits that are already due.

For 10 years Kathleen Simonelli was a devoted server at Mamma Maria’s restaurant in Bensenville, but last month she lost  job.

“I want to go back to work so bad. It’s terrible. My heart sinks to my stomach thinking, ‘Oh my God, I’ve got these bills I need to pay,’” she said.

That first unemployment check came right on time, but in April, as the hundreds of thousands of newly unemployed flooded the system, the second one never arrived.

“It was very devastating, very shocking,” she said. “I’ve never once in my life collected unemployment.”

The state Department of Employment Security paid out $200 million in unemployment benefits in March as businesses closed and laid off employees.

“We effectively stopped the economy to protect citizens, protect everyone from the spread of the coronavirus. In fact, we closed the economy,” said Laurence Msall, president of the Civic Federation, a research organization that looks at issues affecting Illinois including unemployment. “This unprecedented amount of activity in unemployment, and the biggest challenge is we don’t know when it’s going to end.”

The state’s unemployment fund balance is losing money and fast. The fund started April with a balance of around $1.5 billion dollars. In the first two weeks of April it was already down $400 million or about 25%.

Msall said if the state continues go through that much money every two weeks “eventually we’ll deplete the amount of money the State of Illinois has set aside for unemployment.”

About six weeks is when Msall estimates the set aside will run out‚ but that doesn’t mean the unemployment checks will stop. Msall said the state will just borrow money from the fed.

“There is a process in place where the state can take a draw from the federal trust fund and repay it later in order to pay current benefits,” he said.

So the money will keep coming, but the issues like Simonelli’s may not stop any time soon.

“I just wish someone could answer the phone,” she said.

The state can borrow money from the federal government to pay unemployment benefits, but unless it’s a grant, the money has to be repaid. Which means the state will be in debt for years.

Residents will all ultimately pay. Businesses will have higher payroll taxes and will pass on those costs to consumers.

Source: CBS Chicago

The post State Funding For Unemployment Benefits Likely To Run Out Leaving Illinois To Borrow From Federal Government appeared first on NewsColony.
NewsColony

from WordPress https://ift.tt/3axzOoN