Gov. Beebe Says Unemployment Insurance Debt To Be Paid By Year’s End

Gov. Mike Beebe says the state’s unemployment insurance trust fund — which had borrowed as much as $360 million from the feds — is on track to pay back the debt by the end of 2014.

“After another sizable payment to the U.S, government, the balance owed by Arkansas has gone from nearly $360 million to below $3 million. And by year’s end, it will be zero,” Beebe said in his weekly radio address. “In addition, we have rebuilt our Unemployment Insurance trust, which now holds steady at around $200 million dollars to be used in case of a future downturn in the economy.”

The state, along with 34 others, had borrowed heavily from a federal government fund to subsidize unemployment claims in the wake of the economic collapse that began in 2008. The money helped fund unemployment claims for dislocated workers.

“Arkansas’s Unemployment Insurance program served as an important safety net for thousands of Arkansas families during the Recession,” Beebe said. “However, the sudden increase in demand for unemployment assistance quickly depleted the program’s trust fund. So, we had to begin taking advances from the federal government to meet our obligations.”

Lawmakers had studied several solutions to shore up the state trust fund. They gave Beebe the authority to issue bonds to cover revenue needs for the debt. In the end, legislators cobbled together an increase in the tax businesses pay to the insurance fund with a reduction in benefits for workers. The two measures cut costs and increased revenue, helping bring the trust fund back into balance.

“And that accelerated our ability to reimburse the federal government,” Beebe noted. “Arkansas’s cooperative negotiating also saved us from having to pay the servicing fees that would have accompanied bonds if those had been issued.”

“Hopefully, the Great Recession will be a once-in-a-lifetime economic event,” said Beebe. “While we still have work to do and jobs to find for Arkansans, we are on much more stable financial footing than we were five years ago. Both this experience with Unemployment Insurance and our ability to balance budgets without severe spending cuts show that Arkansans, when tested by the fire of crisis, can still work together to find the solutions that best serve our people.”