The chairmen of the General Fund budget committees in the Alabama Legislature said today they have deep concerns about how Alabama could pay the 25% share of a $400 unemployment benefit President Trump has proposed in an executive order.
Sen. Greg Albritton, R-Atmore, who chairs the Senate Finance and Taxation General Fund, said he’s not sure the state can afford to pay the match, partly because there’s no firm estimate on the cost.
“We know 25%, but mathematically, I don’t know how we get an estimate,” Albritton said. “That hasn’t been done yet. So, I am concerned that this will put a grave strain on Alabama’s finances.”
The president issued the executive order Saturday after Congress failed to reach an agreement on a new coronavirus relief package, including help for the millions who have lost their jobs because of the pandemic.
The $600 a week federal unemployment benefit approved by Congress earlier in the pandemic expired at the end of July. In Alabama, the federal payment came in addition to the maximum state benefit of $275 a week.
Rep. Steve Clouse, R-Ozark, who chairs the House Ways and Means General Fund Committee, said the Alabama Department of Labor and the state Finance Department are crunching the numbers on the cost of the state match under Trump’s order.
“But at first glance it doesn’t look like that we could do it,” Clouse said. “Certainly couldn’t do it until the end of the year. Maybe for a couple of months.”
Clouse said the state could use some of the $1.9 billion it received from Congress through the CARES Act, a coronavirus relief bill, to pay the matching funds. But he said there were already discussions about using as much as $350 million to $400 million in CARES Act money to replenish the state’s unemployment compensation trust fund, which needs an infusion to sustain its ability to pay the $275 weekly state benefit.
Tara Hutchison, communications director for the Alabama Department of Labor, said the unemployment compensation fund has gone down from $750 million to a little more than $200 million over the course of the pandemic.
“At current expenditure levels, we expect the fund to remain solvent for about two more months,” Hutchison said in an email. “At that point, we would borrow from the feds in order to continue paying regular (unemployment compensation.)”
Hutchison said the Department of Labor is working with Gov. Kay Ivey’s office on ways to to replenish the fund, but no decision has been made.
In a tweet this morning, the Department of Labor said it expects more guidance from national authorities and the governor’s office on Trump’s order.
Ivey press secretary Gina Maiola said in an email today: “As we continue working to get Alabamians safely back to work, we are exploring the options we have available to provide the necessary assistance. The governor along with the Department of Labor are closely evaluating the most recent directions now.”
Albritton said the state budget outlook has remained stable despite the economic slowdown caused by the pandemic. Tax revenues that support the General Fund revenues are up about 9% over last fiscal year and state education revenues are essentially flat compared to last fiscal year.
“But with this new obligation that’s been put upon us, we’ve got to find an answer to that. And I’m concerned about finding it,” he said.
“And not just the 25%. Our unemployment monies are being depleted. They were quite healthy earlier on, but with the monies that we’ve been paying and continue to pay out, that continues to be a drain. There’s a lot of pieces moving here and we’ve got a get a grasp of this pretty quick.”
Clouse said one priority is to avoid a situation where businesses have to pay more to support the unemployment compensation fund.
“The main goal right now is getting businesses to hire these people back that have lost their jobs through no fault of their own since this pandemic started,” Clouse said. “So, I don’t think us or any other state would want to do anything that would discourage businesses from bringing these employees back.”
Officials in other states are having similar concerns and discussions about Trump’s order and the cost.
According to the Associated Press, Connecticut Gov. Ned Lamont, a Democrat, said on CBS’ “Face the Nation” that it would cost the state $500 million for the rest of the year and called Trump’s plan “not a good idea.”
Ohio Gov. Mike DeWine, a Republican, praised Trump’s effort but declined to say whether his state would participate.
“We’re looking at it right now to see whether we can do this,” he said.