State taps federal loans to pay unemployment

Since Sept. 8, the state has spent about $35 million to cover claims

New Mexico has depleted its unemployment benefits trust fund and begun to use federal loans to keep up with claims — spending that can trigger higher taxes if not repaid, a top labor official said Tuesday.

Workforce Solutions Secretary Bill McCamley said unemployment trust reserves were exhausted on Sept. 8 — and that the state has spent about $35 million since then in borrowed federal funds to maintain unemployment benefits.

New Mexico’s unemployment rate of 11.4 percent in August exceeds that of neighboring states as health officials take gradual steps toward reopening the economy and schools, where most students are still studying from home.

McCamley said about 123,000 people were receiving unemployment benefits as of last week in a state of 2.1 million residents. That’s up from 9,600 active claims in March before the COVID-19 pandemic struck.

The tourism and hospitality industry has been especially hard hit, along with oil production and construction.

In June, lawmakers put a freeze on unemployment insurance tax rates for businesses through the end of 2021. McCamley told a state House committee Tuesday the state will eventually need to reduce unemployment benefits, raise payroll taxes or borrow or refinance federal unemployment loans. The Lujan Grisham administration does not support a decrease in benefits, he said.

Many recipients of unemployment insurance are exhausting the state’s 26-week benefit allowance and tapping into 13 weeks of additional federal unemployment payments, at no cost to the state, McCamley said.

He also said the Lujan Grisham administration is contemplating a decision on when to reinstate a requirement that unemployment beneficiaries actively look for work — a looming day of reckoning for residents still hoping to be rehired by prior employers.

“We are going to start once again — depending on the path of the virus — to start saying OK to everyone, ‘It’s time to get back to work,’ ” he said.

Republican legislators prodded McCamley for indications of when the governor might ease current business restrictions under an emergency health order.

“In our area, people want to get back to work, they’re willing to take a business risk on whether or not they catch this” virus, said GOP Rep. James Strickler, an oil landsman from Farmington.

McCamley said the state continues to pursue a science-intensive decision process on reopening the economy that places a premium on public health and limiting coronavirus infections.

“The more people can control the virus with their behaviors, the more we are going to be able to feel comfortable introducing risk into communities and hopefully people are going to get back to work,” he said.