BACKSTOP FOR JOBLESS BENEFITS
Money in reserve declined about 75% in four months
Since the balance in New Mexico’s unemployment insurance fund has dropped dramatically, the state is requesting up to $285 million from the U.S. Labor Department.
SANTA FE — New Mexico’s jobless rate has hit its highest level in decades during the coronavirus pandemic, causing the state’s unemployment trust fund to be steadily drawn down over the past four months.
In response, state Workforce Solutions Secretary Bill McCamley this week requested up to $285 million from the U.S. Labor Department to make sure the fund does not dry up over the next three months.
“We just want to make sure the details are being taken care of so that people can be absolutely sure they can get their benefits,” McCamley said Wednesday.
He said he expects the request will be approved, because at least 13 other states, including Texas and Colorado, have already received approval for similar aid.
The balance of New Mexico’s unemployment fund dipped from $465 million as of mid-March to $112.7 million last week, according to Department of Workforce Solutions data.
That’s because New Mexico, like other states, has seen a tsunami of jobless benefit claims related to the COVID-19 outbreak, particularly among the leisure and hospitality industries.
More than 10% of the state’s labor force filed initial unemployment claims during a period of about one month shortly after the pandemic began, as state-ordered closures of businesses not deemed to be essential led to widespread employee layoffs and furloughs.
While the state’s unemployment rate has gone down since April, it was still at 8.3% as of last month — well above the 4.9% rate of a year earlier.
Gov. Michelle Lujan Grisham said in April there was an “obvious math problem,” with more money going out to claimants than coming into the fund, but she vowed her administration would not allow the fund to be depleted.
The request for federal funds — technically known as repayable advances — would keep money in the trust fund at least through October, McCamley said.
Under the request, the state would receive up to $35 million in August, and as much as $125 million in both September and October. Any money the state gets will have to be repaid.
McCamley said a decision would be made by September whether to request additional federal funds.
In addition, McCamley said a working group that includes business representatives will study possible structural changes to the fund in the coming months.
That could lead to proposed legislation being drafted for the 2021 legislative session, which starts in January.
Rob Black, the president and CEO of the New Mexico Association of Commerce and Industry, said the request for federal funds did not come as a surprise.
But he said some businesses could face higher payments into the fund next year as the state faces repayment of the federal loan.
“The concern is it becomes a tax on employers, and it becomes much more difficult to bring back employees,” Black told the Journal.
Currently, money is paid into the fund by employers based on a complicated formula that includes total taxable payroll, jobless benefits incurred and a contribution level set by the state.
Among all states, New Mexico was at the middle of the pack going into this year when it came to having enough unemployment funds to weather a recession, according to a Tax Foundation report.
Meanwhile, McCamley said, his agency has added more staffers to its call center and improved its online unemployment site.
Those changes were made after the surge in claims left some applicants frustrated after repeated attempts and countless hours spent trying to access the state’s system.
While McCamley acknowledged the system still is not perfect, he said the agency has paid 93% of those eligible for unemployment benefits and distributed $1.5 billion — a figure that includes expanded federal jobless benefits — since the pandemic started.
“New Mexicans need to know that they’re OK, and we’re doing everything we’re supposed to be doing to make sure they will continue getting the benefits they need to get through these times,” he said.
An extra $600 per week in federal unemployment benefits expires at the end of this week, but it could be at least partially extended if a new congressional stimulus bill is approved.