Sean Harris holds a sign asking for help while standing on the neutral ground on Carrollton Ave. at Bienville Ave. in New Orleans, La. Friday, Sept. 4, 2020. Harris had just completed training to be a haunted history tour guide in the French Quarter when the coronavirus pandemic hit. He has not been able to find a job since. (Photo by Max Becherer,, The Times-Picayune | The New Orleans Advocate)

Louisiana is expected to take on hundreds of millions in debt from the federal government to stave off bankruptcy for its dissipating unemployment fund, and lawmakers acknowledged Tuesday they don’t yet have a plan on how to pay the money back.

The borrowing by the Louisiana Workforce Commission from the U.S. Treasury comes as the fund that pays unemployment benefits to jobless workers was set to run out of money imminently.

Legislators started advancing several resolutions, sponsored by Senate President Page Cortez, to suspend tax hikes and benefit cuts that would otherwise automatically go into effect because the unemployment trust fund has been depleted so much.

That means workers and businesses roiled by the recession won’t suffer more by seeing smaller checks or higher taxes, at least for now. It also means the state will need to find another way to pay back the debt it will incur from the feds.

Businesses won't face tax surcharge and laid-off workers won't face benefits cut in Louisiana -- for now

“We can only kick the can for so long before coming up against a wall,” said Senate Labor and Industrial Relations Committee Chairman Troy Carter, D-New Orleans.

In March, before the pandemic caused historic levels of unemployment, Louisiana’s unemployment trust fund was at more than $1 billion. Since then, it has experienced a stunning decline, and had only $100,000 as of Tuesday, Louisiana Workforce Commission Sec. Ava Dejoie said in an interview.

Dejoie said workers should know the state will never stop paying out benefits, which is why her agency will start borrowing from the federal government Wednesday. 

According to the Associated Press, more than half of U.S. states are taking on similar debt from the federal government to keep their unemployment systems afloat. 

Inside Louisiana's special session: Political tug-of-war over coronavirus orders at heart of agenda

Dejoie said when her agency started filling out paperwork to borrow from the feds through the U.S. Department of Labor, officials estimated needing $200 million a month in federal money to pay benefits. But now, officials project taking on about $236 million total because the number of people receiving benefits is dropping so fast.

That’s not because they are getting back to work. Instead, workers are hitting their 26-week cap on benefits, meaning they no longer qualify for the funds. Many of those workers then can receive 13 more weeks of federal benefits.

“What we’re paying weekly is declining at a rapid rate given people are exhausting their 26 weeks of state unemployment benefits,” Dejoie said.

The unemployment trust fund takes in money through taxes on businesses' payrolls and pays benefits to laid-off workers. The maximum benefit is $247 a week, among the lowest in the U.S., and state law normally requires the benefit to be cut to $221 a week if the fund falls below $750 million.

If the resolutions pass through the Legislature, workers won’t see those benefit cuts and businesses won’t be charged with new taxes.

Dejoie said she will begin borrowing from the federal government to pay out benefits starting tomorrow, in order to keep the money flowing to laid-off workers. The agency estimates that based on the number of people on unemployment, and the number who will become ineligible after exhausting their benefits, the state will have to use $236 million from the federal government to pay benefits. The money won’t have to be repaid until September.

“We’ll continue with business as usual,” she said.

By the end of each September, a state panel, the Revenue Estimating Conference, is required to project how much money will be in the unemployment fund the following year. If that amount is expected to be less than $750 million, benefits are cut to $221 a week starting Jan. 1. If the amount is projected to be less than $100 million, which Dejoie said is the case, employers would also be on the hook for an additional 30% unemployment tax, which amounted to $61.6 million last year.

Additionally, the state normally applies another tax of 1.4% of the first $15,000 employers pay in wages if the state takes on debt to pay unemployment benefits. And a surtax to repay the interest on federal debt is typically applied.

All those taxes and benefit cuts would be suspended until July 30, 2021, if legislation by Cortez and Sen. Mike Reese, R-Leesville, pass.

Acadiana Business Today: Retail sales dip in August, still up 16% since start of pandemic

Email Sam Karlin at