MONTGOMERY — Some Alabama leaders on Monday said that if the state had to come up with a 25% match for President Donald Trump's proposed unemployment benefit extension, it would have to opt out of the additional support for the jobless.
Trump on Saturday signed an executive order to continue paying supplemental federal unemployment benefits to millions of Americans out of work because of the coronavirus. Trump’s order cut previous additional benefits of $600 a week to $400 and, because it is based on disaster relief statute that require a 25% state funding match, states like Alabama would need to kick in $100 a week for each beneficiary.
Some in Congress have questioned the constitutionality of Trump's order, while others have criticized the content. Democratic U.S. Sen. Doug Jones said $400 a week is not enough to help struggling families and urged the Senate to reconvene and continue negotiating on a full legislative package.
"The executive order to extend the now-lapsed emergency unemployment assistance will cut benefits by $200 a week or more for Alabamians and asks states, whose budgets have already been burdened by the pandemic, to foot part of the bill," Jones said.
Gov. Kay Ivey’s press secretary Gina Maiola would not say whether Ivey approved of Trump's plan and the state match, but said Ivey and the Department of Labor were evaluating the most recent directions about it now.
“As we continue working to get Alabamians safely back to work, we are exploring the options we have available to provide the necessary assistance,” Maiola said.
States this week are awaiting further federal guidance on the order, including whether previously-distributed coronavirus relief money could be used to pay their $100 per-person, per-week matches. Congress and the Treasury Department put strict limits on how federal CARES Act dollars could be spent by states, but nothing in the current guidance mentions state matches for unemployment benefits.
However, Trump on Sunday said states could apply to have the federal government provide all or part of the $400 payments, the Associated Press reported. He said decisions would be made on a state-by-state basis.
State Sen. Arthur Orr, R-Decatur, who chairs the Senate education budget committee, said Monday the required match would cost the state $350 million to $400 million through the end of the year. Right now, there is about $200 million in the state's unemployment compensation fund.
"We don't have the money in the bank," Orr said. Plus, if the COVID-19 situation and unemployment worsen into the fall, the cost to the state will grow.
Orr said options for the state include the waiver Trump mentioned Sunday or using CARES relief money.
“But we need to be careful on breaking the bank today if things get worse come October or November on the jobs front,” Orr said.
Enough for 2 months
Tara Hutchison, a spokeswoman for Alabama’s Department of Labor, said the unemployment insurance benefits trust fund balance pre-pandemic was $750 million.
“We expect to be able to pay out regular UI benefits for about two more months at the current rate before we approach insolvency,” Hutchison said.
After those two months, Alabama would then need to start borrowing from the federal government unless a federal relief package is passed or new unemployment claims go down. Hutchison said she did not know how much the state would need to borrow but that it would likely be a daily drawdown to cover benefits until Alabama could start covering them again.
Approximately 170,000 people received some sort of unemployment insurance benefit last week, Hutchison said.
During the pandemic response, more than $3 billion, much of it federal, has been spent on unemployment compensation in Alabama, Orr said.
In the Senate, Greg Albritton, R-Range, said he’s “all in” with what Trump is trying to accomplish and working around “obstructionists” in Congress. Still, he said, the state can’t afford a $100-a-week match.
“I can tell you that it comes out to be ginormous money that we don’t have funding for,” Albritton, Senate General Fund budget committee chairman, said.
“I don’t think it’s fiscally possible,” Albritton said. “My response would be, we would if we could, but we cannot.”
Disincentive to work?
There is also a concern about giving people a disincentive to resume working, Orr said. If the benefits are enough to keep people from working, it is hard to justify the additional compensation dollars, he said.
"Then I think it’s going to be an uphill climb to justify the additional compensation dollars," he said.
Senate Pro Tem Del Marsh, R-Anniston, agrees with Trump's plan and thinks $400 a week is a good amount to support Alabamians while they try to find new employment. He said the state should sign on if the financial pieces fit.
"I think we have to do something and the president is tired of waiting around for Congress," Marsh said. "A lot of people are in need right now and I think the $400 is enough to give folks an incentive to get back to work."