By Brian R. Hook, Missouri Watchdog
Unemployment benefits for more than 30,000 out-of-work residents across Missouri are set to run out as the holiday season gets underway, according to the Missouri Labor Department and Industrial Relations.
Approximately 66,000 individuals throughout Missouri currently on regular state unemployment benefits will not qualify for any federal emergency or extended benefits when they exhaust their regular claims, said Amy Susan, a spokesperson for the labor department.
Approximately 12,000 will lose their extended benefit eligibility the week ending Dec. 4. Another 18,200 will exhaust regular benefits at the end of the same week.
Each week after, approximately 6,200 will exhaust regular benefits, Susan told Missouri Watchdog.
Funding Unemployment Benefits
From January through October this year, Missouri has paid out $1.5 million in unemployment benefits compared to $1.3 million during the same period last year.
As Missouri Watchdog reported last week, the unemployment rate in Missouri edged up to 9.4 percent in October, up from 9.3 percent in August and September. Unemployment was at 9.3 percent in October last year.
Unemployment benefits are funded by federal funds and will have no impact on the state’s budget, Susan said.
Missouri Budget Director Linda Luebbering concurred, saying an extension of the benefits may help the budget in an indirect way. ”It provides some money for those individuals to spend,” she told Missouri Watchdog.
“To the extent they spend them on taxable items, that helps our revenue collections,” Luebbering said. ”However, I would say that people on unemployment spend a large chunk of their dollars on items that we do not tax.”
The lack of federal funds, however, may hurt the state unemployment insurance fund, according to research from the Missouri Budget Project, a progressive public policy organization. As Missouri Watchdog reported in October, the unemployment insurance fund faces a growing deficit of more than $722 million, the research finds.
Missouri started borrowing from the federal unemployment trust fund in February 2009, accruing debt. States are required to repay this amount, along with interest. But under the American Recovery and Reinvestment Act, otherwise known as federal stimulus, a short-term moratorium on state interest payments was enacted.
Without further federal action, Missouri will be required to begin repayment of interest and principal next year. The research notes that the state would need to pay a loan interest payment of $51 million in September, 2011.
To pay off the debt employers will face an unemployment tax increase in Missouri, either through a state tax increase to fund the unemployment insurance fund, or by a federal tax increase, through decreased credit, to refund the federal unemployment insurance fund, according to the Missouri Budget Project research.
