As Louisiana takes on federal debt to pay unemployment benefits after running out of money in the jobless fund, lawmakers on Monday rejected a proposal to boost benefits to jobless workers by $100 a week, while advancing measures to suspend benefit cuts and tax hikes on businesses that typically help replenish the fund.
Lawmakers still haven’t figured out how they’re going to pay back the federal government, which is loaning the state money to ensure benefits don’t stop flowing to laid-off workers.
But the Republican-led Legislature has started advancing several measures that would prevent businesses from taking on higher taxes to replenish the fund. The state Senate has also pushed a measure to suspend a cut to benefits. Without the legislation, both the tax hikes and benefit cuts would automatically go into effect when the unemployment fund, which is out of money, falls below a certain threshold.
But the House Labor and Industrial Affairs Committee wasn’t willing to boost the maximum weekly benefit to laid-off workers by $100, from $247 to $347 weekly, to provide more money to unemployed as Congress remains deadlocked on a new stimulus deal in the run-up to the presidential election.
Proponents of the boosted benefits – including around two dozen unemployed people who came to the State Capitol to rally in favor of additional aid – said the state’s relatively meager maximum benefit of $247 a week isn’t enough to live on. Most people receive less than that amount.
“I went from having two means of income to nothing,” said Cordelia Rogers, who lost her two jobs in the hospitality industry in New Orleans because of the pandemic. “It’s not that we don’t want to work. We can’t work.”
Rep. Royce Duplessis, D-New Orleans, conceded the legislation would increase the burn rate of the state’s unemployment trust fund. But he argued the state should send the money to workers while it’s borrowing from the feds at no interest through the end of the year and relatively low interest after that.
“We have to continue to push back against this false choice ... That if you support workers, you’re somehow against business,” Duplessis said at the rally outside the Capitol.
The Louisiana Association of Business and Industry, the state’s largest business lobby, opposed the legislation, which the committee rejected on a 9-5 party-line vote, with Republicans voting against and Democrats voting in favor.
Jim Patterson, vice president of government relations at LABI, said he’s open to discussing the idea of higher benefits next year. But he said the lobby opposes the legislation because of the timing, when the unemployment fund is depleted and the state is borrowing from the feds to keep benefits flowing. He suggested employers would eventually be on the hook for restoring the fund, even as the Legislature suspends higher business taxes on those businesses.
“This is just not the time,” Patterson said. “We’re asking businesses to essentially rebuild the fund. Whether we like it or not that’s going to have to happen.”
Louisiana Workforce Commission Secretary Ava Dejoie said in an interview Louisiana has already taken on more than $4 million in debt from the feds as of the end of last week to pay benefits. That number has likely risen substantially but new figures won't be available until Tuesday.
Dejoie also said tens of thousands of people may have already run out of their 26 weeks of state unemployment benefits. Many of those people may qualify for additional federal benefits because of the pandemic.
Louisiana has among the lowest maximum benefit, $247 a week, in the U.S. The Louisiana Budget Project, a left-leaning advocacy group supporting Duplessis’ bill, said the state actually has the lowest average weekly benefit in the country.
The federal government had injected more aid to jobless workers in the months since the pandemic started. First, jobless workers got an extra $600 a week through a law passed by Congress. Then, after that expired and the money went away, President Donald Trump issued an executive order to redirect some disaster aid money to give workers an extra $300 a week.
Last month, though, that money went away too, and Congress has not come close to a deal to send more help to laid-off workers, which number in the hundreds of thousands in Louisiana, a state whose oil and gas and hospitality industries took a beating from the pandemic and government restrictions.
Meanwhile, the historic levels of unemployment caused a stunning drop in the unemployment insurance trust fund, which is the account that takes in taxes from businesses and pays out benefits to laid-off workers. It sat at over $1 billion in March; this month it virtually ran out of money, forcing the Louisiana Workforce Commission to begin borrowing from the U.S. Treasury.
Republican lawmakers appear willing to suspend higher taxes on businesses that would otherwise go into effect Jan. 1 because the fund balance is projected to be so low next year, including a roughly $60 million-a-year solvency tax. The higher taxes and a cut to benefits – from $247 to $221 a week – usually go into effect so the fund can regain its strength.
Legislators have said it’s not the fault of employers or jobless workers that the fund is running out. Instead, the pandemic put an extraordinary amount of stress on an unemployment system not designed to pay benefits to hundreds of thousands of workers at a time.
Legislation to suspend the higher taxes and benefit cuts advanced through another Senate committee Monday and will be heard by the full Senate. The House Labor Committee, before rejecting the proposal to boost benefits, advanced legislation to suspend the taxes but not the benefit cuts.
“This repeal of the solvency tax would be one more step forward to give businesses an opportunity to reopen their doors and rebuild what they’ve lost over the last seven or eight months,” said Rep. Michael Echols, R-Monroe.